If the Price of a Good Increases by 20% and That

question 72

Multiple Choice

If the price of a good increases by 20% and that leads to a decrease in quantity demanded by 60%,what is the price elasticity of demand for that good?

• A)30.
• B)3.
• C)1/3.
• D)1/6.

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Definitions:

Deferred Tax Liability

A tax obligation that a company owes but does not have to pay until a future date, usually resulting from differences in accounting methods for tax and financial reporting purposes.

Asset Revaluation

The upward or downward adjustment of the book value of an asset to properly reflect its current market value.

Profits

The financial gain obtained when revenues generated from business activities exceed the expenses and costs associated with those activities.

Investor

An individual or entity that commits capital with the expectation of receiving financial returns, often through the purchase of stocks, bonds, or other investment vehicles.