At a Price of $2,000 Per Unit, the Demand for Rancho

question 57

Multiple Choice

At a price of $2,000 per unit, the demand for Rancho 60 mountain bikes from Cloyd's Inc. is 300 units, which is same as the number of bikes manufactured every year. If the marketing managers at Cloyd's Inc. decide to sell each bike at a price lower than $2,000 per unit, _____.

• A)a shortage of bikes will be created
• B)the number of bikes produced will increase drastically
• C)an inelastic demand for the bikes will be created
• D)the demand for and the supply of the bikes will attain equilibrium

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Definitions:

Sensitivity Analysis

A technique used to determine how different values of an independent variable affect a particular dependent variable under a given set of assumptions.

Break-even Point

The financial point at which total costs equal total revenue, meaning that the business is neither making a profit nor a loss.

Cost-volume-profit Analysis

An accounting technique used to determine how changes in costs and volume affect a company's operating income and net income.

Sales Mix

The relative distribution of sales among the various products available for sale.