A Firm Is Observed Using 15 Units of Input X

question 190

Multiple Choice

A firm is observed using 15 units of input X when the price of X is $2. If the price of X increases to $4, the firm uses only 6 units of it. What is the price elasticity of demand for input X? (Use the simple formula for percentage change: [(new# −old#) /old#] × 100%.)

• A)1/2 = 0.5
• B)3/5 = 0.6
• C)5/3 = 1.67
• D)2

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Definitions:

Paradigm Innovation

A significant shift in the fundamental concepts and practices of a particular domain or industry.

Product Development

The process of bringing a new product or service to the market, involving concept generation, design, development, and marketing.

Idea Creation

The process of generating new, innovative concepts or solutions.

Competitive Advantage

An attribute that allows an organization to outperform its competitors, achieved through offering superior value to customers or lower costs.