You Are Reading the Quarterly Financial Report of One of Your

question 212

Multiple Choice

You are reading the quarterly financial report of one of your competitors. You expected to see their total sales revenue decline because they had a large price increase during the quarter. You were certain that the price increase would lead to an equivalently large decrease in their total sales revenue. To your surprise, their total sales revenue actually increased in the quarter. Based on this information, which of the following explanations could explain why the competitor's total sales revenue increased?

• A) The demand for the company's products is inelastic, so total revenue declines when prices are raised.
• B) The demand for the company's products is elastic, so total revenue declines when prices are raised.
• C) The demand for the company's products is elastic, so unit sales increase when prices are raised.
• D) The demand for the company's products is inelastic, so total sales revenue increases when prices are raised.
• E) The demand for the company's products is elastic, so fixed costs increase when prices are raised.

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Definitions:

Animal Rights

The conviction that animals deserve to have ownership of their lives and should be given equal consideration to human beings’ comparable interests.

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Nomothetic

An approach in social science that seeks to find general laws that can explain human behavior through the study of large groups.

Idiographic

An approach in research and psychology that focuses on the individual, considering unique characteristics and personal experiences.