Assuming We Are Considering a Normal Good,the Calculated Price Elasticity

question 55

Multiple Choice

Assuming we are considering a normal good,the calculated price elasticity of demand is:

• A)always positive.
• B)always negative.
• C)positive if demand is elastic and negative if demand is inelastic.
• D)positive if demand is inelastic and negative if demand is elastic.

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Definitions:

Penetration Pricing

A pricing strategy where the price of a new product is intentionally set lower than the competition to gain market share quickly.

Price Skimming

A pricing strategy in which a company charges the highest initial price that customers will pay for a new product, then gradually lowers the price to attract more price-sensitive customers.

Variable Costs

Costs that change in proportion to the level of activity or volume of output in a business, such as raw materials and labor costs.

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent or salaries.