If Pete Raises His Price of Muffins from $2 to $3

question 97

Multiple Choice

If Pete raises his price of muffins from $2 to $3 and his sales revenue increases from $35,000 to $38,000, then:

• A) the demand for Pete's muffins in this range is price elastic.
• B) the demand for Pete's muffins in this range is price inelastic.
• C) the demand for Pete's muffins in this range is unit elastic.
• D) the percentage change in quantity demanded must exceed the percentage change in product price.
• E) this is impossible since this would violate the law of demand.

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Definitions:

Yield To Maturity

The total return anticipated on a bond if the bond is held until it matures, taking into account its current market price, par value, coupon interest rate, and time to maturity.

6 ¾% Bond

A bond that pays an annual interest rate of 6.75% to its holder, typically issued by governments or corporations.

Yield To Maturity

Yield to maturity is the total return anticipated on a bond if the bond is held until it matures, considering all interest payments and the principal repayment.

8% Bond

A bond that pays an annual interest rate of 8% to its holders.