Suppose the Price Elasticity of Demand for Basketballs Is 1

question 171

Multiple Choice

Suppose the price elasticity of demand for basketballs is 1.2.What will result from a 20 percent increase in price

• A)a 24 percent decrease in the quantity of basketballs demanded
• B)a 20 percent decrease in the quantity of basketballs demanded
• C)an 8 percent reduction in the number of basketballs demanded
• D)a 12.5 percent reduction in the number of basketballs demanded

---

Definitions:

Working Capital

The balance sheet accounts associated with day-to-day operating activities. Gross working capital is generally defined as current assets and net working capital as current assets minus current liabilities.

Accounts Receivable

Money owed to a company by its customers for goods or services already delivered but not yet paid for.

Inventory

Represents the goods or materials a business holds for the purpose of resale or production.

Interest Expense

The cost incurred by an entity for borrowed funds, which can include the cost of bonds, loans, or lines of credit.