When the Price of a Product Does Not Change as a Result

question 31

True/False

When the price of a product does not change as a result of changes in demand, the price insensitivity to demand is called demand inelasticity.

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Definitions:

Incremental Revenues

Additional income generated from a new project or decision, above and beyond existing revenues.

Incremental Variable Costs

Costs that vary with the level of output or activity, changing as the quantity produced changes.

Fully Depreciated

A status of an asset whose entire cost has been expensed with respect to depreciation, leaving its book value at zero except for salvage value, if any.

Excess Capacity

A situation where a company can produce more goods or services than currently demanded by its market.