Zipee Inc'S Unit Selling Price Is $90, the Unit Variable Costs

question 47

Multiple Choice

Zipee Inc.'s unit selling price is $90, the unit variable costs are $40.50, fixed costs are $170,000, and current sales are 12,000 units. How much will operating income change if sales increase by 5,000 units?

• A) $125,000 decrease
• B) $175,000 increase
• C) $75,000 increase
• D) $247,500 increase

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Definitions:

Elastic

In economics, elasticity refers to the degree to which demand or supply responds to changes in price. High elasticity means a significant change in quantity with a small change in price.

Unit-elastic

A situation in which the percentage change in quantity demanded is equal to the percentage change in price, indicating a unitary elasticity of demand.

Labor Demand

Refers to the quantity of workers that employers are willing to hire at a given wage rate.

Rapidly Declining

This term describes a situation where values, prices, or quantities are decreasing quickly over a period of time.