How Is the Price-Change Formula to Predict the Change in the Equilibrium

question 27

Multiple Choice

How is the price-change formula to predict the change in the equilibrium price resulting from a change in demand calculated?

• A) by dividing the percentage change in price by the sum of the price elasticities of supply and demand
• B) by dividing the percentage change in demand by the sum of the price elasticities of supply and demand
• C) by dividing the percentage change in supply by the sum of the price elasticities of supply and demand
• D) by dividing the percentage change in income by the sum of the price elasticities of supply and demand

---

Definitions:

Total Fixed Costs

The sum of all costs that do not change with the level of production or sales, over a specified period of time.

Manufactures

Companies or individuals involved in the conversion of raw materials into finished goods, through the use of labor and machinery.

Office Furniture

Fixed assets consisting of desks, chairs, tables, cabinets, and other furnishings used in an office environment.

Variable Utilities Cost

Expenses for utilities that change in proportion to the level of production or activity of a business.