If the Price Elasticity of Demand for a Good Is

question 15

Multiple Choice

If the price elasticity of demand for a good is 6,then a 3 percent decrease in price results in

• A)a 20 percent increase in the quantity demanded.
• B)an 18 percent increase in the quantity demanded.
• C)a 2 percent increase in the quantity demanded.
• D)a 1.8 percent increase in the quantity demanded.

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Definitions:

Bond

A form of interest-bearing note used by corporations to borrow on a long-term basis.

Times Interest Earned Ratio

This ratio measures a company's ability to meet its debt obligations based on its current income, calculated as earnings before interest and taxes divided by interest expense.

Income Before Taxes

The amount of revenue left after deducting all operating expenses, interest, and depreciation, but before paying income taxes.

Straight-Line Method

A depreciation technique where an equal amount of depreciation is charged for each year of the asset's useful life.