Use the following information for the next 2 questions.
TTV Corporation's managers estimate that a 50% increase in price would cause an 80% reduction in the quantity of product sold. Total fixed costs for the product are $5,000 and total variable costs are $4,000, based on production of 400 units. The following values may be useful:
-TTV's price elasticity of demand is
A) -3.973
B) -0.252
C) +0.322
D) +3.108

Question

Use the following information for the next 2 questions.
TTV Corporation's managers estimate that a 50% increase in price would cause an 80% reduction in the quantity of product sold. Total fixed costs for the product are $5,000 and total variable costs are $4,000, based on production of 400 units. The following values may be useful: 
-TTV's price elasticity of demand is
A) -3.973 
B) -0.252 
C) +0.322 
D) +3.108

Quizplus · Accepted Answer

Price elasticity of demand is typically negative, indicating that as price increases, demand decreases. A value of -3.973 suggests a highly elastic demand, meaning demand is very responsive to price changes.

Use the Following Information for the Next 2 Questions