If the Demand for Product X Is Inelastic,a 4 Percent

question 4

Multiple Choice

If the demand for product X is inelastic,a 4 percent increase in the price of X:

• A)decreases the quantity demanded of X by more than 4 percent
• B)decreases the quantity demanded of X by less than 4 percent
• C)increases the quantity demanded of X by more than 4 percent
• D)increases the quantity demanded of X by less than 4 percent
• E)does not affect the quantity demanded of X

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Definitions:

Total Revenue

The total receipts from sales of goods or services over a certain period of time before any expenses are subtracted.

Variable Input

An input in the production process that changes quantity with the level of output, such as labor or raw materials.

Marginal Revenue Product

The additional revenue generated from using one more unit of a factor of production, key in making decisions on resource allocation.

Profit-maximizing

A strategy or process utilized by businesses to determine the price and output level that results in the highest profit.