Suppose a Factory Is Producing 100 Units and the Price

question 32

Multiple Choice

Suppose a factory is producing 100 units and the price of each unit is $10.If raising the price to $12 per unit results in a drop in sales of 12 units,what is the price elasticity of demand,η?

• A)6
• B)0.6
• C)1.67
• D)0.8
• E)0.17

---

Definitions:

Identification

The process of recognizing and acknowledging the specific identity of a person or thing.

Goods

Tangible and movable personal property that can be sold or bought.

Acceptance

In contract law, the expression by the offeree of their agreement to the terms of the offer, forming a legally binding contract.

Merchants

Businesses or individuals engaged in the sale of goods, particularly in a specialized market.