If the Price Elasticity of Demand for Cigarettes Is 0

question 64

Multiple Choice

If the price elasticity of demand for cigarettes is 0.4,

• A) The demand is very elastic.
• B) A 10 percent increase in price will cause quantity demanded to fall by 40 percent.
• C) The demand is very inelastic.
• D) A 5 percent decrease in price will cause quantity demanded to rise by 10 percent.

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Definitions:

Value-added Time

The period during which a product or service is being modified or enhanced to increase its value to the customer.

Residual Income

Residual income is the amount of income that an individual or business has after all personal debts and expenses, including a mortgage, have been paid.

Divisions

Distinct business units or sections within a company, each responsible for certain aspects of the organization's operations.

ROI

Return on Investment; a performance measure used to evaluate the efficiency of an investment by comparing the amount of return relative to the investment's cost.