Which of the Following Is True

question 166

Multiple Choice

Which of the following is true?
i.The supply of a good is inelastic if when its price changes,the percentage change in the quantity supplied exceeds the percentage change in price.
ii.Price elasticity of supply equals the percentage change in the quantity supplied divided by the percentage change in price.
iii.If demand is price elastic,a rise in price leads to a decrease in total revenue.

• A) only i
• B) only ii
• C) only iii
• D) i and ii
• E) ii and iii

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Definitions:

Price Skimming

A pricing strategy where a firm charges the highest initial price that customers will pay and lowers it over time as demand at the higher price is satisfied.

Maximizing Profits

The process or strategy of adjusting the operations, pricing, and production of a business to generate the highest possible profit margins.

Development Costs

Costs incurred in the design and development phase of a project, often relating to the creation of new products or services.

Variable Costs

Expenses that change in proportion to the level of production or business activity.