Which of the Following Describes a Situation in Which Demand

question 170

Multiple Choice

Which of the following describes a situation in which demand must be elastic?

• A) The price of pens rises by 10 cents, and quantity of pens demanded falls by 50.
• B) The price of pens rises by 10 cents, and total revenue rises.
• C) A 20 percent increase in the price of pens leads to a 20 percent decrease in the quantity of pens demanded.
• D) Total revenue does not change when the price of pens rises.
• E) Total revenue decreases when the price of pens rises.

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Definitions:

Cost-Plus Pricing

A technique for pricing where a distinct markup is added to the unit cost of a product to establish its selling price.

Linear Programming

A mathematical method used to determine the best possible outcome or solution from a given set of parameters or constraints, usually applied in maximizing or minimizing a linear function.

Material Charges Formula

A calculation used to determine the direct costs associated with the materials used in the production of goods or services.

Pricing Decisions

Refers to the process of setting the price for a product or service, considering factors like cost, competition, and customer demand.