The Midpoint Formula Is Used to Measure the Elasticity of Demand

question 157

Multiple Choice

The midpoint formula is used to measure the elasticity of demand between two points on a demand curve

• A)when demand is elastic.
• B)in special cases when the percentage change in the quantity demanded is equal to the percentage change in price.
• C)to ensure that the elasticity has a negative value.
• D)to ensure that we have only one value of the price elasticity of demand between two points on a demand curve.

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Definitions:

Absorption Costing

Absorption costing is an accounting method that includes all manufacturing costs (direct materials, direct labor, and both variable and fixed manufacturing overhead) in the cost of a product.

Multiproduct CVP Analysis

A method used in managerial accounting to analyze the profitability of products by examining the relationship between cost, volume, and price across multiple products.

Constant Sales Mix

An assumption in cost-volume-profit analysis that the sales mix will remain unchanged as sales levels vary.

Assumption

A basic premise or belief that is accepted as true without proof as the basis for argument or inference.