The Formula for the Price Elasticity of Demand Is the

question 24

Multiple Choice

The formula for the price elasticity of demand is the

• A) unit change in price times the unit change in quantity demanded.
• B) change in price divided by the absolute change in quantity demanded.
• C) percentage change in price divided by the percentage change in quantity demanded.
• D) percentage change in quantity demanded divided by the percentage change in price.
• E) percentage change in price divided by the percentage change in total revenue.

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Definitions:

Interest Rate

The amount charged by a lender to a borrower for the use of assets, expressed as a percentage of the principal, usually on an annual basis.

Optimal Capital Structure

The ideal mix of debt and equity financing that minimizes a company's cost of capital and maximizes its value and stock price.

WACC

Weighted Average Cost of Capital, a calculation of a firm's cost of capital that weighs each category of capital proportionately.

EPS

EPS stands for Earnings Per Share, a key financial indicator that divides net earnings available to shareholders by the average outstanding shares, illustrating the company's profit on a per-share basis.