If a Firm Finds the Demand for One of Its

question 55

Multiple Choice

If a firm finds the demand for one of its products is inelastic, it can increase its total revenues by

• A) lowering its price.
• B) increasing fixed costs only.
• C) increasing variable costs only.
• D) increasing both fixed and variable costs.
• E) raising its price.

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Definitions:

Net Income

The company's net profit, calculated by subtracting all costs and taxes from its overall revenue.

Net Loss

The amount by which total expenses exceed total revenues for a specific period, indicating a reduction in equity.

Accruals

Accounting method where revenue and expenses are recorded when they are earned or incurred, regardless of when the cash transaction takes place.

Unrecorded Expense

An expense that has been incurred but not yet documented or reported in the accounting records.