A Good Has a Price Elasticity of Demand Equal to 2

question 71

Multiple Choice

A good has a price elasticity of demand equal to 2. If new imports lower its price from $1.20 to $0.80, the percentage change in quantity demanded will be

• A)an increase of 80 percent.
• B)a decrease of 80 percent.
• C)a decrease of 40 percent.
• D)an increase of 2 percent.
• E)an increase of 40 percent.

---

Definitions:

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or a normal operating cycle, whichever is longer.

Short-term Notes

Debt securities with shorter maturities, typically less than one year, used by companies to meet immediate financing needs.

Depreciation Calculations

Methods used to allocate the cost of a tangible asset over its useful life, reflecting its decrease in value.

Shareholder Reporting

The process of providing financial and operational information to a company's shareholders, typically on a quarterly and annual basis.