Price and Total Revenue Move in Inverse Directions When Demand

question 160

Multiple Choice

Price and total revenue move in inverse directions when demand is

• A) price elastic.
• B) price inelastic.
• C) unit price elastic.
• D) perfectly price inelastic.

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Definitions:

Contribution Margin

The difference between a company's sales revenue and its variable costs, used to cover fixed costs and generate profit.

Variable Cost

A corporate expense that changes in proportion with production output, such as raw materials and labor costs, differing from fixed costs.

Operating Cash Flow

The cash generated from the normal operations of a business, excluding financing and investing activities.

Variable Costs

Charges that adjust in direct proportion to the amount of goods produced or sold.