An Absolute Price Elasticity of Demand Equal to 0

question 133

Multiple Choice

An absolute price elasticity of demand equal to 0.4 indicates that a

• A) 4 percent increase in price leads to a 10 percent decrease in quantity demanded.
• B) 1 percent increase in price leads to a 4 percent decrease in quantity demanded.
• C) 0.4 percent decrease in price leads to a 1 percent increase in quantity demanded.
• D) 10 percent decrease in price leads to a 4 percent increase in quantity demanded.

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Definitions:

Accounting Information

Data generated from the accounting processes of a company, including financial statements and records that inform stakeholders about its financial performance.

Business Entities

Legal structures that are allowed to engage in business, such as corporations, partnerships, and sole proprietorships.

Liabilities

Financial obligations or debts owed by a business to creditors, which must be settled over time through the transfer of assets, provision of services, or other economic benefits.

Assets

Resources owned by a company that have future economic value that can be measured and can be used to generate income.