When Companies Do Not Want To,or Find It Too Costly

question 116

Multiple Choice

When companies do not want to,or find it too costly to,use market prices,they typically use ________ prices,even though suboptimal decisions may occur.

• A)full-cost
• B)long-run cost
• C)short-run average cost
• D)average-cost

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Definitions:

Cross Price Elasticity

A measure of the responsiveness of the quantity demanded for one good to a change in the price of another good, indicating the degree of substitutability or complementarity between them.

Midpoint Method

The midpoint method is a technique used in economics to measure the elasticity of demand or supply, minimizing the bias in the response to price changes by using the average percentages of change in both quantity and price.

Income

Earnings acquired on a routine basis through work or investment profits.

Price Elastic

Describes a situation where the demand for a product changes significantly in response to a change in the product's price.