If a Price Increase from $5 to $7 Causes Quantity

question 13

Multiple Choice

If a price increase from $5 to $7 causes quantity demanded to fall from 150 to 100,what is the absolute value of the own price elasticity at a price of $7?

• A) 0.57
• B) 1.75
• C) 0.02
• D) 1.24

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Definitions:

Controllable Fixed Costs

Fixed costs that management has the ability to influence or change in the short term.

Profit Center

A responsibility center that incurs costs and also generates revenues.

Average Operating Assets

The average value of the assets used in the normal operations of a business over a certain period, often used in evaluating the performance of investment centers.

Controllable Margin

A financial metric used to assess the amount of profit that can be controlled or influenced by managerial decisions.