If the Absolute Price Elasticity of Demand Is 0

question 240

Multiple Choice

If the absolute price elasticity of demand is 0.2, a 10 percent increase in the price will cause

• A) the quantity demanded to decrease by 2 percent.
• B) the quantity demanded to decrease by 20 percent.
• C) the quantity demanded to decrease by 5 percent.
• D) the quantity demanded to decrease by 0.2 percent.

---

Definitions:

Cost of Goods Available

The total cost of inventory available for sale, calculated as the beginning inventory plus the cost of goods manufactured or purchased.

Overapplied Overhead

Occurs when the amount of overhead allocated to products exceeds the actual overhead incurred.

Cost of Goods Sold

The direct costs attributable to the production of the products sold by a company.

Finished Goods Inventory

The total value of goods that have completed the production process but have not yet been sold to customers.