In Examining the Concept of Price Elasticity of Demand, It

question 193

Multiple Choice

In examining the concept of price elasticity of demand, it is seen that if:

• A) price and quantity change in the opposite direction, then demand is price elastic.
• B) price and total revenue change in the opposite direction, then demand is price inelastic.
• C) price and total revenue change in the opposite direction, then demand is price elastic.
• D) price and total revenue change in the same direction, then demand is price elastic.

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Definitions:

Break Even

The point at which total costs and total revenues are equal, meaning there is no profit or loss.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the ratio of fixed costs to variable costs.

Contribution Margin

The amount remaining from sales revenue after variable expenses have been deducted, indicating how much contributes to the fixed costs and profits.

Scatter Diagram

A graph used in statistics to visually display and assess the possible relationship between two numerical variables.