If the Demand for a Good Is Elastic, Then Total

question 31

Multiple Choice

If the demand for a good is elastic, then total revenue

• A) increases as price increases.
• B) remains constant as quantity demanded increases.
• C) increases as price decreases.
• D) decreases as quantity demanded increases.
• E) decreases as price decreases.

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Definitions:

Operating Period

The amount of time a business or a part of it operates within a specific timeframe, typically a fiscal year or quarter.

Variable Costing

An accounting method that includes only variable manufacturing costs—direct materials, direct labor, and variable manufacturing overhead—in the cost of goods sold.

Absorption Costing

A system of accounting that encompasses the full range of manufacturing costs—direct materials, direct labor, and overheads both variable and fixed, within the cost framework of a product.

Break-even Sales

The amount of revenue required to cover total fixed and variable costs, resulting in a net profit of zero.