If a 30 Percent Price Increase Generates a 20 Percent

question 297

Multiple Choice

If a 30 percent price increase generates a 20 percent decrease in quantity demanded,then demand is

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

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Definitions:

Asset Turnover

A financial ratio that measures the efficiency of a company's use of its assets in generating sales revenue, indicating how effectively assets are utilized.

Generate Sales

The activity of creating or increasing revenue through the sale of goods or services.

Price-Earnings Ratio

A valuation ratio of a company's current share price compared to its per-share earnings, used to evaluate if a stock is over or underpriced.

Asset Turnover Ratio

A measure of how efficiently a company uses its assets to generate sales revenue, calculated by dividing total sales by average total assets.