Using the Midpoints Formula, What Would Be Price Elasticity of Demand

question 52

Multiple Choice

Using the midpoints formula, what would be price elasticity of demand for a gallbladder operation if the number of operations fell from 6,000 to 4,000 per week after its price increased from $6,000 to $10,000?

• A) 0.25.
• B) 0.50.
• C) 0.80.
• D) 1.25

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Definitions:

Manufacturing Overhead

All costs incurred in the production process that cannot be directly attributed to specific units produced, such as maintenance and utilities.

Conversion Cost

The sum of direct labor and manufacturing overhead costs, representing the costs needed to convert raw materials into finished goods.

Direct Materials

These are the raw materials that are directly incorporated into a finished product.

Prime Cost

The combined direct costs of raw material and labor that are directly associated with the production of a product.