Economics 0455 · IGCSE · Price changes

Price changes — practice question

A company chose to lower the price of its product by $10\%$. What would happen?

  • AThe firm’s costs would decrease if the elasticity of demand was greater than one.
  • BThe firm’s profits would increase if the elasticity of demand was greater than one.
  • CThe firm’s revenue would increase if the elasticity of demand was greater than one.
  • DThe quantity sold would decrease if the elasticity of demand was less than one.

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