Assume the Demand for a Good Is Price Inelastic,i

question 93

Multiple Choice

Assume the demand for a good is price inelastic,i.e.,ed < 1 (in absolute value) .This means that if price decreases by 50 percent,quantity demanded will:

• A)increase by more than 50 percent.
• B)decrease by more than 50 percent.
• C)increase by less than 50 percent.
• D)decrease by less than 50 percent.

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Definitions:

Variable Cost

A cost that changes in proportion with the level of output or activity.

Fixed Costs

Business expenses that remain unchanged regardless of the level of production or sales activities, such as rent, salaries, and insurance.

Breakeven Volume

The quantity of output or sales at which total revenues equal total costs, resulting in no profit or loss.

Sales Revenues

The total amount of money generated from sales of goods or services by a company before any expenses are subtracted.