The Price Elasticity of Demand Is a Measure of the

question 163

Multiple Choice

The price elasticity of demand is a measure of the

• A)effect of changes in demand on the price.
• B)relationship between price and profitability.
• C)responsiveness of buyers of a good to changes in its price.
• D)sensitivity of a good's price to changes in demand.

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Definitions:

Break-even Point

The point where the amount of goods produced or sold matches the total expenses, leading to neither a profit nor a loss.

Contribution Margin

The difference between sales revenue and variable costs, used to cover fixed costs and to generate profit.

Variable Expense Ratio

The proportion of variable expenses to total sales, illustrating how variable costs change with sales levels.

Break-even Point

The level of production or sales at which total revenues equal total costs, resulting in zero profit or loss.