If a Small Percentage Change in Price Causes a Larger

question 121

Multiple Choice

If a small percentage change in price causes a larger percentage change in the quantity demanded, the good has:

• A) an inelastic demand.
• B) a low magnitude of response.
• C) an elastic demand.
• D) a high magnitude of response.

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Definitions:

Reservation Price

The maximum amount an individual is willing to pay for a good or service.

Utility Function

An economic depiction of the way a consumer prioritizes various goods or combinations of goods.

Revenue Maximizing Price

The price point at which a company can generate the maximum amount of revenue from selling its product or service, considering the demand and cost factors.

Football Tickets

Football tickets are passes that allow entry to watch a football game, often sold by teams or authorized vendors.