When a Higher Price Cannot Bring About Any Increase in the Quantity

question 62

Multiple Choice

When a higher price cannot bring about any increase in the quantity supplied, the supply is

• A)perfectly elastic.
• B)unit elastic.
• C)zero.
• D)perfectly inelastic.
• E)infinity.

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Definitions:

Break-even Point

The point at which total revenue equals total costs, resulting in no profit or loss for the business.

Sales Mix

The combination of different products or services that a company sells, which impacts the overall profitability.

Contribution Margin Ratio

A ratio that measures the percentage of sales revenue available to cover fixed expenses and generate profit, calculated as the contribution margin divided by sales revenue.

Annual Fixed Expenses

Expenses that do not change in total regardless of changes in the volume of activity or production levels, such as rent or salaries.