If the Price Elasticity of Demand Is -4

question 96

Multiple Choice

If the price elasticity of demand is -4.0,a 5 percent decrease in price will increase quantity demanded by

• A) 0.8 percent.
• B) 1.25 percent.
• C) 20 percent.
• D) 80 percent.
• E) 125 percent.

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Definitions:

Operating Costs

Expenses associated with the day-to-day functions of a business, excluding costs related to the production of goods.

Useful Life

The estimated time period that an asset is expected to be operational and economically useful to the owner.

Net Present Value

A method used in capital budgeting to evaluate the profitability of an investment or project, calculated by discounting future cash flows to their present value and subtracting the initial investment cost.

Working Capital

The difference between a company's current assets and current liabilities, indicating its short-term liquidity.