If the Price of Gasoline Rises,when Is the Price Elasticity

question 67

Multiple Choice

If the price of gasoline rises,when is the price elasticity of demand likely to be the highest?

• A)immediately after the price increases
• B)one month after the price increase
• C)three months after the price increase
• D)one year after the price increase

---

Definitions:

Operating Leverage

The degree to which a firm or project can increase operating income by increasing revenue, a measure of how revenue growth translates into growth in operating income.

Variable Costing

A managerial accounting method that includes only variable production costs (materials, labor, and overhead) in product costs, treating fixed manufacturing overhead as an expense of the period.

Absorption Costing

An accounting method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a product.

Net Income

The total profit of a company after all expenses and taxes have been deducted from total revenues.