If the Percentage Change in the Price of a Good

question 2

Multiple Choice

If the percentage change in the price of a good is less than the resulting percentage change in the quantity demanded of that good, then the demand for that good is:

• A)elastic.
• B)inelastic.
• C)unit elastic.
• D)perfectly inelastic.

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Definitions:

Profit-maximizing

The process or goal of increasing a firm's profits to the highest possible level by adjusting output and pricing strategies.

Marginal Revenue Product

Additional income derived from the employment of an extra production factor.

Diminishing Marginal Returns

A principle stating that if one factor of production is increased while others remain constant, the overall returns will eventually decrease after a certain point.

Marginal Revenue Product

The additional income generated from using one more unit of a resource or factor of production.