If Demand Is Unit Elastic, a 25 Percent Increase in Price

question 57

Multiple Choice

If demand is unit elastic, a 25 percent increase in price will result in

• A) a 25 percent change in total revenue.
• B) no change in the quantity demanded.
• C) a 1 percent decrease in the quantity demanded.
• D) a 25 percent decrease in the quantity demanded.
• E) a 100 percent change in the quantity demanded.

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Definitions:

EOQ Analysis

Economic Order Quantity Analysis, a tool used in inventory management to determine the optimal order quantity that minimizes the total cost of inventory, including holding and ordering costs.

Carrying Costs

Expenses associated with maintaining inventory, including storage, insurance, and spoilage costs.

Ordering Costs

Expenses incurred in placing and receiving orders for goods, including transportation, handling, and clerical costs.

Option Contract

A financial derivative that gives the holder the right, but not the obligation, to buy or sell an underlying asset at a specified price within a specified timeframe.