Suppose the Price Elasticity of Demand for Oranges Is -1

question 219

Multiple Choice

Suppose the price elasticity of demand for oranges is -1.8.If a fall frost destroys one-third of the nation's orange crop, how will that affect total expenditures on oranges, all other things unchanged?

• A) total expenditures will rise
• B) total expenditures will fall
• C) total expenditures will remain unchanged
• D) not enough information is given to answer the question

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Definitions:

Common Dividends

Payments made to shareholders from a corporation's earnings, representing a portion of the profits allocated to holders of the company's common stock.

Revenue Test

A criterion used to determine when revenue is recognized in the accounting records, based on the completion of a revenue-generating process or event.

Asset Test

A measure used to evaluate a company's ability to meet its short-term liabilities with its most liquid assets.

Profit (Loss) Test

A financial assessment to evaluate the profitability or loss of a business operation or investment.