If the Price Elasticity of Demand Is 1

question 25

Multiple Choice

If the price elasticity of demand is 1.0 and a firm raises its price by 15 percent,the total revenue will:

• A) Rise by 15 percent.
• B) Fall by 15 percent.
• C) Rise by 6.67 percent.
• D) Not change.

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Definitions:

Standard Costs

Predetermined costs assigned to goods and services, used as benchmarks to measure performance by comparing them with actual costs.

Factory Overhead

The sum of all indirect costs of manufacturing, including expenses related to the operation of factories such as utilities and rent, articulated with different phrasing.

Predetermined Rate

A rate established in advance to apply overhead costs to products or job orders, usually based on estimated costs and activity levels.

Standard Cost Tables

Reference charts that list the predetermined costs for various products or services, facilitating cost control and budgeting.