Relative Percentage Changes Are Used in Measuring Price Elasticity of Demand

question 107

Multiple Choice

Relative percentage changes are used in measuring price elasticity of demand, so that

• A) it does not matter whether price increases or decreases when calculating the elasticity.
• B) it does not matter what units are used to measure prices or quantities.
• C) we always obtain a positive number.
• D) larger numbers indicate greater responsiveness.

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Definitions:

Cash Flows

A financial statement segment that shows how changes in balance sheet accounts and income affect cash and cash equivalents, categorizing flows into operating, investing, and financing activities.

Inventory Purchases

The total cost of goods bought for resale during a specific financial period.

Cost of Goods Sold

Expenses specifically associated with the production of a company's sold products, such as materials and labor.