If the Price Elasticity of Demand for a Product Is

question 107

Multiple Choice

If the price elasticity of demand for a product is unity, a decrease in price will

• A)have no effect upon the amount purchased.
• B)increase the quantity demanded and increase total revenue.
• C)increase the quantity demanded but decrease total revenue.
• D)increase the quantity demanded, but total revenue will be unchanged.

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Definitions:

Monopolistically Competitive

Pertaining to a market scenario characterized by many sellers offering differentiated products or services, creating a competitive atmosphere.

Marginal Cost

The growth in overall expenses resulting from the manufacture of an extra unit of a product or service.

Average Total Cost

The total cost of production divided by the quantity of output produced, representing the average cost per unit of output.

Concentration Ratio

A measure of the total market share held by a specific number of the largest firms within an industry, indicating the degree of market concentration.