As the Manager of a Ski Resort, You Want to Increase

question 1

Multiple Choice

As the manager of a ski resort, you want to increase the number of lift tickets sold by 8 percent. Your staff economist has determined that the price elasticity of demand for lift tickets is 2. To increase sales by the desired amount, you should decrease the price of a lift ticket by:

• A) 2 percent.
• B) 4 percent.
• C) 8 percent.
• D) 16 percent.

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Definitions:

Total Asset Turnover

A ratio calculating how effectively a company utilizes its assets to produce sales income.

Return on Equity

A measure of a corporation's profitability, indicated by the amount of net income returned as a percentage of shareholders equity.

Return on Assets

A financial ratio indicating how efficiently a company uses its assets to generate profit.

Equity Multiplier

An equity multiplier is a financial ratio that measures the proportion of a company’s total assets financed by its shareholders' equity, demonstrating the degree of financial leverage being used.