If the Price Elasticity of Demand for Some Good Is

question 145

Multiple Choice

If the price elasticity of demand for some good is 2.7,a 10% increase in the price results in

• A)a 2.7% decrease in the quantity demanded.
• B)a 2.7% increase in the quantity demanded.
• C)a 27% increase in the quantity demanded.
• D)a 27% decrease in the quantity demanded.
• E)There is not enough information to answer this question.

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Definitions:

Speculation

The act of trading in an asset or engaging in a financial transaction that has a significant risk of losing most or all of the initial outlay, in expectation of a substantial gain.

Investments

Assets purchased with the expectation that they will generate income in the future or appreciate and be sold at a higher price.

Standby Equipment

Equipment that is kept on hand and ready to be used as a backup in case primary equipment fails.

Property, Plant, Equipment

Long-term tangible assets used in the operation of a business that are expected to provide benefits for more than one year.