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In 2012, Raleigh Sold 1,000 Units at $500 Each, and Earned

question 24

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In 2012, Raleigh sold 1,000 units at $500 each, and earned net income of $50,000.Variable expenses were $300 per unit, and fixed expenses were $150,000.The same selling price is expected for 2013.Raleigh's variable cost per unit will rise by 10% in 2013 due to increasing material costs, so they are tentatively planning to cut fixed costs by $15,000.How many units must Raleigh sell in 2013 to maintain the same income level as 2012?


Definitions:

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in its price, indicating its sensitivity.

Demand Curve

A graphical representation showing the relationship between the price of a good or service and the quantity demanded for a given period.

Price Elasticity

The responsiveness of the quantity demanded of a good to a change in its price.

Price Elasticity

An indicator of the degree to which the demand or supply of a product adjusts due to a variation in its cost.

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