If a Business Decreased the Price of Its Product from $10

question 57

Multiple Choice

If a business decreased the price of its product from $10 to $9 when demand was price inelastic,then total revenues would:

• A) decrease.
• B) increase.
• C) remain unchanged.
• D) be perfectly inelastic.

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Definitions:

Disposable Income

Income that is available to households after paying taxes and receiving government transfers, used for spending or saving.

C

In the context of economic models, often stands for Consumption, which is a component of the GDP formula representing total spending by consumers on goods and services.

Gross Investment

The total amount spent on purchases of new capital assets and replacement of depreciated assets, not adjusted for depreciation.

Depreciation

Depreciation refers to the accounting method of allocating the cost of a tangible asset over its useful life, representing how much of an asset's value has been used up over time.