If a Company Increased Its Price from $100 to $120

question 16

Multiple Choice

If a company increased its price from $100 to $120 and the quantity demanded fell by 40 percent, the price elasticity of demand for this product is

• A)2.
• B)1/2.
• C)−1/2.
• D)−2.
• E)4.

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Definitions:

Annual Rate of Return Technique

A method of evaluating investments by calculating the expected annual rate of profit or loss.

Annual Cash Inflows

The total amount of money received by a company or individual within a year from various sources.

Economic Life

Economic life is the estimated period over which an asset is expected to be useful to the owner for the purpose of generating income or other economic benefits.

Internal Reports

Reports generated within an organization for the purpose of decision making by management, not for public dissemination.