The Figure Given Below Shows the Demand Curves for Five

question 18

Multiple Choice

The figure given below shows the demand curves for five products: A, B, C, D, and E.Figure 6.1

-Refer to Figure 6.1. Which of the following is true when prices increase from P₁ to P₂?

• A)The change in quantity demanded is larger for C than D, thus the demand for D is relatively less elastic than it is for C.
• B)The change in the quantity demanded following the price increase is the largest for C.
• C)The change in the quantity demanded following the price increase is the least for D.
• D)The demand for E is perfectly inelastic.
• E)The change in quantity demanded is larger for C than A, thus the demand for C is more elastic than it is for A.

---

Definitions:

Safety Inventory

A quantity of stock maintained in reserve to protect against uncertainties in demand or supply, ensuring that operations continue smoothly.

Lot Size

The quantity of goods considered to be a standard amount for buying or manufacturing, often determined by considering production efficiency and inventory holding costs.

Fill Rate

The percentage of customer demand that is met without backorders or delays, indicating the efficiency of inventory management.

Forecast Uncertainty

The degree of unpredictability in predicting future events, often related to demand, supply, or other market factors.