If the Demand for Product X Is Inelastic, a 4

question 148

Multiple Choice

If the demand for product X is inelastic, a 4 percent decrease in the price of X will

• A)decrease the quantity of X demanded by more than 4 percent.
• B)decrease the quantity of X demanded by less than 4 percent.
• C)increase the quantity of X demanded by more than 4 percent.
• D)increase the quantity of X demanded by less than 4 percent.

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Definitions:

Fixed Costs

Expenses that remain constant regardless of production or sales volume, including rent, salaries, and insurance costs.

Depreciation Expense

Depreciation expense represents the method used to allocate the cost of a tangible asset over its useful life, reflecting the decrease in value over time.

Annual Variable Costs

The costs that vary directly with the volume of production or sales within a specific year.

Worst-Case Scenario

The most adverse or unfavorable outcome that can occur in a situation.