If a Good Has an Absolute Price Elasticity of 4

question 101

Multiple Choice

If a good has an absolute price elasticity of 4, the demand for the good is

• A) unit elastic.
• B) inelastic.
• C) perfectly elastic.
• D) elastic.

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Definitions:

Operating Leverage

A measure of how sensitive a company's operating income is to changes in its revenue, indicating the proportion of fixed versus variable costs.

Financial Risk

The possibility of losing money on an investment or business venture due to various financial factors.

ROE

Return on Equity; a financial ratio indicating the profitability of a company by comparing net income to shareholders' equity.

EBIT

Earnings Before Interest and Taxes, a measure of a company's profitability excluding interest and income tax expenses.