Elliptical Company Advertises Fitness Step, an Exercise Machine, Online

question 1

Multiple Choice

Elliptical Company advertises Fitness Step, an exercise machine, online. There are several disclosures that Fitness Step needs to make, including shipping costs, surcharges for shipping the large machine, and warnings about the use of the machine by people with certain health conditions. In this context, the company must

• A) not address all of the disclosures online because it will clutter up the information.
• B) clearly and conspicuously disclose the information online.
• C) include a hyperlink in a footnote so that consumers can find the disclosures if they are interested.
• D) note that disclosures exist and place a link for consumers to click to request a hard copy of the disclosures.

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Definitions:

Marginal Cost Function

A mathematical representation showing how the cost of producing one additional unit of a good changes as production volume changes.

Optimal Output

The level of production that maximizes a firm’s profit or minimizes its cost under given conditions.

Profit

The financial gain acquired when the revenue generated from business activities exceeds the expenses, costs, and taxes needed to sustain the activity.

Industry Supply Curve

A graph that shows the relationship between the price of a good and the total output of the industry for that good.