Assume the Price Elasticity of Demand for a Product Is

question 11

Multiple Choice

Assume the price elasticity of demand for a product is -4.In this case,the firm's optimal markup is (approximately) :

• A)400 percent.
• B)100 percent.
• C)33 percent.
• D)25 percent.

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Definitions:

Inputs

The resources (such as labor, raw materials, and capital) used in the production process to create goods or services.

Resources

Assets, materials, and inputs used to produce goods and services.

Input Market

The market where resources or inputs such as labor, materials, and capital are bought and sold, allowing businesses to produce goods and services.

Households

Entities consisting of one person or a group of people who share living accommodations and make joint or separate decisions in consumption and investment.