Body of Knowledge on Infrastructure Regulation
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Regulatory Challenges (FAQs)
Introduction
Overview
1. General Concepts
2. Market Structure and Competition
3. Financial Analysis
4. Price Level Regulation
5. Tariff Design
6. Quality, Social, Environmental
7. Regulatory Process
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Self-Testing
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1. General Concepts
2. Market Structure and Competition
3. Financial Analysis
4. Price Level Regulation
5. Tariff Design
6. Quality, Social, Environmental
7. Regulatory Process
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Chapter 5 Self-test
Question 1 of 7
Which of the following is
false
?
The price elasticity of demand is the responsiveness of demand to changes in price.
The price elasticity of demand is calculated by dividing the percentage change in quantity demanded by the percentage change in price.
The price elasticity of demand shows how an increase in price will affect total firm revenues; e.g., a value between -1 and zero indicates an inelastic demand.
When demand is inelastic, a price increase results in a decrease in total revenue.