The Price Elasticity of Demand for a Product Tends to Be

question 72

Multiple Choice

The price elasticity of demand for a product tends to be greater the

• A)lower its price.
• B)more broadly the product is defined.
• C)fewer close substitutes for it there are.
• D)more close substitutes for it there are.
• E)shorter the time span being considered.

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Definitions:

Fixed Costs

Costs that do not vary with the level of production or sales, including rent, salaries, and insurance premiums.

Break-even

The point at which total costs and total revenues are equal, resulting in no net loss or gain for a business.

Sales

The total revenue generated from selling goods or services over a certain period.

Variable Costs

Costs that vary depending on the level of activity within a business, like those associated with raw materials or the production process.