Hanson Corporation Recently Changed the Selling Price of One of Its

question 53

Multiple Choice

Hanson Corporation recently changed the selling price of one of its products. Data concerning sales for comparable periods before and after the price change are presented below. $$\begin{array} { c c } \text { Selling Price } & \text { Unit Sales } \\\$ 62.00 & 5,200 \\\$ 63.00 & 5,000\end{array}$$ The product's price elasticity of demand as defined in the text is closest to:

• A)-1.71
• B)-1.65
• C)-1.85
• D)-2.45

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Definitions:

Average Tax Rate

The fraction of total income that is paid as taxes, calculated by dividing the total amount of taxes paid by the taxpayer's total income.

Marginal Tax Rate

The rate at which the last dollar of a person's income is taxed, indicating how much tax will be paid on an additional dollar of income.

Income Before Taxes

The gross income a person or corporation earns before taxes are deducted.

Marginal Tax Rate

The rate at which an additional dollar of income is taxed, serving as a useful measure of the impact of taxes on incentives to earn more.