An Absolute Price Elasticity of Demand Equal to 0

question 133

Multiple Choice

An absolute price elasticity of demand equal to 0.4 indicates that a

• A) 4 percent increase in price leads to a 10 percent decrease in quantity demanded.
• B) 1 percent increase in price leads to a 4 percent decrease in quantity demanded.
• C) 0.4 percent decrease in price leads to a 1 percent increase in quantity demanded.
• D) 10 percent decrease in price leads to a 4 percent increase in quantity demanded.

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Definitions:

Operating Cycle

The period it takes for a company to purchase inventory, sell products, and collect cash from customers, reflecting the efficiency of its business operations.

Total Asset Turnover

A financial ratio that measures a company's ability to generate sales from its assets by comparing sales to total assets.

Average Sale Period

The time it takes to convert your inventory into sales, usually expressed in days.

Average Sale Period

The average sale period is the average time taken to convert inventory into sales, often used to assess the efficiency of a business's inventory management.