Assuming Price Elasticity of Demand Is Reported as an Absolute

question 52

Multiple Choice

Assuming price elasticity of demand is reported as an absolute value, a price elasticity of one indicates that:

• A) the percentage change in quantity demanded will equal the percentage change in price.
• B) the percentage change in quantity demanded will equal one.
• C) both the percentage change in price and quantity demanded must equal one.
• D) the percentage change in quantity demanded and the percentage change in price must sum to one.

---

Definitions:

Six Years

A period of time equal to six times the length of one calendar year.

Present Value

The present worth of a future amount of money or series of cash flow at a given return rate.

Payable

This term refers to an amount of money that is due to be paid.

Compounded Annually

Interest on an investment that is calculated once a year, where the interest earned each year is added to the principal.