When the Price of a Product Is Increased 5 Percent

question 379

Multiple Choice

When the price of a product is increased 5 percent, the quantity demanded decreases 2 percent. The price-elasticity-of-demand coefficient for this product is

• A)0.4.
• B)4.
• C)2.5.
• D)25.

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Definitions:

Critical

Pertaining to a crucial or decisive point that requires immediate attention or presents a significant challenge.

Competition

The rivalry between businesses to sell their goods or services to customers, often leading to better quality and prices.

Environmental Change

Alterations to the natural environment caused by human activity or natural processes, impacting ecosystems, climate, and land use.

Small Business

A privately owned and operated business, usually characterized by small number of employees and modest revenue.