Assume a Change in Price Causes the Price Elasticity of Demand

question 48

Multiple Choice

Assume a change in price causes the price elasticity of demand for a good (in absolute value) and marginal revenue to decrease.In this case we can conclude that the price of the good was:

• A)increased.
• B)held constant.
• C)decreased.
• D)cannot be determined.

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Definitions:

Loss

A situation in which expenses exceed revenues, leading to negative profit.

Monopolistic Competitor

In market economics, a monopolistic competitor refers to a company operating in a sector filled with competitors, yet it has enough differentiation to have some control over its pricing.

Downward Sloping

A description of a curve or line that shows a decrease in one variable as another variable increases, commonly seen in demand curves.

Demand Curves

Graphical representations showing the relationship between the price of a good and the quantity demanded by consumers.