Assume the Price Elasticity of Demand for a Product Is

question 11

Multiple Choice

Assume the price elasticity of demand for a product is -4.In this case,the firm's optimal markup is (approximately) :

• A)400 percent.
• B)100 percent.
• C)33 percent.
• D)25 percent.

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Definitions:

WACC

Stands for Weighted Average Cost of Capital; it represents the average rate of return a company is expected to pay its security holders to finance its assets.

Business Risks

The exposure a company or organization faces from factors that may affect its ability to achieve its objectives or financial goals.

Financial Risks

The risk of experiencing financial loss from an investment or entrepreneurial activity.

Financial Leverage

The use of borrowed funds to increase the potential return of an investment, which also increases the risk of loss.