Which of the Following Statements About Price Elasticity of Demand

question 199

Multiple Choice

Which of the following statements about price elasticity of demand is true?

• A)The more substitutes a product has, the less likely it is to be price elastic.
• B)Price elasticity with unitary demand is less than 1.
• C)With inelastic demand, a reduction in price increases total revenue.
• D)With inelastic demand, price elasticity is less than 1.

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Definitions:

Potential Entrant

Refers to a business or company that is not currently in a market but has the capability and interest to enter the market if certain conditions are met.

Dominant Strategy

A strategy in game theory that yields the best outcome for a player regardless of what strategies other players choose.

Nash Equilibria

A situation in a non-cooperative game where no player can benefit by changing strategies, assuming the other players also don't change their strategies.

Maximin Strategy

A decision rule in game theory that aims to maximize the minimum gain possible from a set of strategies.