If a Small Percentage Change in Price Causes a Larger

question 121

Multiple Choice

If a small percentage change in price causes a larger percentage change in the quantity demanded, the good has:

• A) an inelastic demand.
• B) a low magnitude of response.
• C) an elastic demand.
• D) a high magnitude of response.

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Definitions:

Unit Fixed Costs

Costs that remain constant for a product regardless of how many units are produced or sold.

Decision Making

The process of making choices by identifying a decision, gathering information, and assessing alternative resolutions.

Incremental Revenue

Additional income generated from selling more units of a product or from launching a new product or service.

Relevant Information

Information that is applicable and crucial to the decision-making process, having the ability to affect the outcome of a decision.