When Demand Is Elastic

question 2

Multiple Choice

When demand is elastic,

• A)marginal revenue is negative.
• B)the percentage change in price exceeds the percentage change in quantity.
• C)an increase in price causes total revenue to rise.
• D)both b and c
• E)none of the above

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Definitions:

MR

An abbreviation for Marginal Revenue, which is the additional income from selling one more unit of a good or service.

Long-Run Equilibrium

A situation in a market where supply equals demand, and all factors of production - including labor and capital - are fully utilized, leading to stable prices.

ATC

Average Total Cost, which represents the total cost per unit of output produced, calculated by dividing the total cost by the quantity produced.

Break-Even Point

The level of production or sales at which total revenues are equal to total costs, resulting in no net loss or gain.