A Men's Tie Store Sold an Average of 30 Ties

question 21

Essay

A men's tie store sold an average of 30 ties per day when the price was $5 per tie.The same store sold 60 of the same ties per day when the price was $3 per tie.In this case, the price elasticity of demand (using the midpoint method) is:
A.greater than zero but less than 1.
B.equal to 1.
C.greater than 1 but less than 3.
D.greater than 3.

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Definitions:

Manufacturing Overhead

All the indirect costs associated with producing a product, excluding the direct costs of labor and materials.

Electrical Motor

A device that converts electrical energy into mechanical energy, commonly used in various applications to drive machinery.

Fixed Manufacturing Overhead

This refers to the consistent costs associated with the manufacturing process that do not vary with the level of production, such as salaries of managers and depreciation of factory equipment.

Overapplied

A situation where the allocated manufacturing overhead cost is greater than the actual overhead incurred.