When the price drops from Rs 2,000 to Rs 1,800, the annual quantity demanded rises from 5,000 units to 6,000 units. Which statement below is accurate?

Multiple choice question for Supply and Demand. Select an option, then review the explanation below.

Explanation

Option A is correct because the price elasticity of demand, calculated using the percentage change in quantity demanded divided by the percentage change in price, results in -2. Options B, C, and D refer to income elasticity or product type, which are not relevant to this price and quantity change.

Practice related questions from the same subject.

1.What is the typical shape of a demand curve?
2.What term describes a company earning profits beyond its normal profit level?
3.How does an increase in marginal cost affect output, and how does an increase in marginal revenue impact output?
4.Marginal revenue refers to the ________ resulting from producing an additional ________ of output.
5.What are firms generally assumed to do with their costs and profits?

When the price drops from Rs 2,000 to Rs 1,800, the annual quantity demanded rises from 5,000 units to 6,000 units. Which statement below is accurate?

Explanation

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