Use the Figure Below to Answer the Following Question(s)

question 170

Multiple Choice

Use the figure below to answer the following question(s) .
Figure 7-6
-In the price range between $3 and $4, the price elasticity of the demand curve depicted in Figure 7-6 is

• A) highly elastic.
• B) approximately equal to −0.33.
• C) approximately equal to −3.
• D) of unitary elasticity.

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Definitions:

Fixed Expenses

Recurring costs that do not vary with the level of production or sales, such as rent, salaries, and insurance.

Degree of Operating Leverage

A financial ratio that measures the sensitivity of a company's operating income to a change in its sales volume, signifying the impact of fixed versus variable costs.

Variable Expenses

Costs that vary directly with the level of production or sales volume, such as raw materials, direct labor, and sales commissions.

Fixed Expenses

Costs that remain constant for a set period of time, regardless of changes in the level of production or sales volume.