Figure: Elasticity and Quantity Demanded Refer to the Figure

question 250

Multiple Choice

Figure: Elasticity and Quantity Demanded Refer to the figure. An increase in price from $40 to $50 would cause the change in quantity demanded for D₁ to be:

• A) greater than the change in quantity demanded for D₂ so D₁ is more elastic than D₂.
• B) greater than the change in quantity demanded for D₂ so D₂ is more elastic than D₁.
• C) less than the change in quantity demanded for D₂ so D₁ is more inelastic than D₂.
• D) less than the change in quantity demanded for D₂ so D₂ is more inelastic than D₁.

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Definitions:

Perpetual Inventory System

A method of accounting for inventory that continuously updates inventory records after each purchase or sale.

FIFO Periodic Inventory Method

The first-in, first-out (FIFO) periodic inventory method assumes that goods sold are those that were added to the inventory earliest, calculated periodically at the end of a reporting period.

Ending Inventory

Goods' valuation ready for trading at the end of a bookkeeping period.

FOB Shipping Point

A term that indicates the buyer takes responsibility for goods once they are shipped, and the point of departure marks the transfer.