If the Price Elasticity of Demand for a Good Is

question 15

Multiple Choice

If the price elasticity of demand for a good is 6,then a 3 percent decrease in price results in

• A)a 20 percent increase in the quantity demanded.
• B)an 18 percent increase in the quantity demanded.
• C)a 2 percent increase in the quantity demanded.
• D)a 1.8 percent increase in the quantity demanded.

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Definitions:

Direct Labor Hours

The amount of time workers spend directly manufacturing a product or providing a service, used to allocate labor costs in production.

Variable Selling

Costs related to selling that vary with sales activity, such as sales commission.

Fixed Costs

Fixed costs are business expenses that do not change in proportion to the volume of goods or services produced or sold.

Make or Buy

A decision-making process regarding whether to produce goods in-house or purchase them from an external supplier.