Which of the Following Could Be the Price Elasticity of Demand

question 84

Multiple Choice

Which of the following could be the price elasticity of demand for a good for which an increase in price would decrease revenue?

• A) 0
• B) 0.5
• C) 1
• D) 1.5

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Definitions:

Normal Profit

The minimum profit necessary for a company to remain competitive in the market; it corresponds to the opportunity cost of capital.

Product Price

The amount of money charged for a product or service, determined by factors such as cost of production, market demand, and competition.

Curve Steepness

The rate at which the slope of a curve increases or decreases, often used in economics to describe the sensitivity of one variable to another.

Maximizes Profits

The process or strategy whereby a firm adjusts its production and pricing to achieve the highest possible profit.