When the Price of a Product Is Increased 10 Percent

question 353

Multiple Choice

When the price of a product is increased 10 percent, the quantity demanded decreases 15 percent. The price-elasticity-of-demand coefficient for this product is

• A)1.5.
• B)0.15.
• C)0.67.
• D)6.7.

---

Definitions:

Current Year

Refers to the ongoing calendar or fiscal year in which business is conducted or accounting is measured.

Income Statement

A financial statement that shows a company's financial performance over a specific accounting period, detailing revenues, expenses, and net income.

Contribution Margin

The difference between sales revenue and variable costs of a product or service, indicating how much contributes towards covering fixed costs and generating profit.

Gross Margin

A financial measurement that calculates the difference between a company’s total revenue and the cost of goods sold, expressed as a percentage of total revenue.