If Demand Is Highly Inelastic and Supply Shifts to the Left

question 85

Multiple Choice

If demand is highly inelastic and supply shifts to the left:

• A) neither price nor quantity will rise much.
• B) price will hardly rise at all; quantity will decline significantly.
• C) price probably will rise significantly, as will quantity.
• D) price will rise significantly; quantity hardly changes at all.

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Definitions:

Break-even Point

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

Sales Dollars

This term represents the total amount of revenue a company generates from the sale of its goods or services, expressed in dollars.

Operating Leverage

A measure of how a company's operating income responds to changes in sales volume, highlighting the impact of fixed costs on profitability.

Budgeted Sales

The amount of revenue that a company plans or expects to generate from the sale of goods or services during a specific period.