Suppose There Is a 6 Percent Increase in the Price

question 278

Multiple Choice

Suppose there is a 6 percent increase in the price of good X and a resulting 6 percent decrease in the quantity of X demanded.Price elasticity of demand for X is

• A)0.
• B)1.
• C)6.
• D)36.

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Definitions:

Interest

The charge for the privilege of borrowing money, typically expressed as an annual percentage rate.

Holding-Period Return

The total return received from holding an asset or portfolio over a period of time, considering all sources of income and capital gains.

Capital Gains Yield

The price appreciation component of the total return on an investment, calculated as the rise in the investment's price divided by its initial price.

Dividend Yield

A financial ratio that shows how much a company pays out in dividends each year relative to its share price.