Which of the Following Is True of Price Elasticity of Demand

question 65

Multiple Choice

Which of the following is true of price elasticity of demand?

• A)The price elasticity of demand is only defined by the competitive conditions in a country.
• B)Demand is said to be inelastic when a large change in price produces a large change in demand.
• C)Demand is said to be elastic when a large change in price produces a small change in demand.
• D)Price elasticity tends to be greater in countries with low income levels.
• E)The elasticity of demand is inversely proportional to the number of competitors offering a particular product.

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Definitions:

Marginal Revenue

The extra revenue obtained by selling an additional unit of a product or service.

Demand Schedule

A table that lists the quantity of a good that consumers are willing to purchase at various prices.

Maximize Profits

The goal of businesses to achieve the highest possible level of profit through revenue maximization and cost minimization.