What Is the Effect of a 10 Percent Price Increase

question 127

Multiple Choice

What is the effect of a 10 percent price increase on total revenue if elasticity is infinity?

• A)Revenue increases by 10 percent.
• B)Revenue increases by less than 10 percent.
• C)Revenue does not change.
• D)Revenue decreases.
• E)Revenue drops to 0.

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Definitions:

Credit Memo

A document issued by a seller that reduces the amount owed by a buyer, typically due to a return or rebate.

FOB Shipping Point

A term used in shipping agreements indicating that the buyer assumes responsibility for the goods and their transportation costs from the point of departure.

Insurance in Transit

Insurance in transit covers risk to goods and materials while they are being transported from one location to another.

Inventory Costs

Expenses associated with storing and managing goods that a company holds for sale.