A Local Popular Coffee Shop Has Increased Its Regular Coffee

question 51

Multiple Choice

A local popular coffee shop has increased its regular coffee price by 15% and observed decrease in demand of 5%.The demand for the regular coffee at this coffee shop is:

• A)Elastic
• B)Inelastic
• C)Break even
• D)Could be either elastic or inelastic
• E)Prestige

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Definitions:

Fixed Expenses

Expenses that remain constant regardless of production or sales volume, including items like lease payments, employee wages, and insurance costs.

Financial Advantage

The benefit gained from making economic decisions that result in increased wealth or financial health.

Average Cost

A method of cost valuation that calculates the cost of goods sold and inventory based on the average cost of all similar items in inventory.

Fixed Manufacturing Overhead

Costs that do not vary with the level of production, such as rent, salaries, and equipment depreciation, associated specifically with manufacturing.