If the Quantity Demanded Increases by 20 Percent in Response

question 173

Multiple Choice

If the quantity demanded increases by 20 percent in response to a 10 percent decrease in price, demand is classified as

• A) unstable.
• B) relatively inelastic.
• C) relatively elastic.
• D) of unitary elasticity.

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Definitions:

Forecasting Risk

The possibility that errors in projected cash flows lead to incorrect decisions.

Projected Sales

An estimate of the amount of revenue that a company expects to generate in a future period.

Sensitivity Analysis

Investigation of what happens to NPV when only one variable is changed.

Capital Budgeting

The process in which a business evaluates and selects its long-term investments based on their potential financial returns.