Figure 5-11 -Refer to Figure 5-11.A Decrease in Price from $20 to from $20

question 233

Multiple Choice

Figure 5-11
-Refer to Figure 5-11.A decrease in price from $20 to $10 leads to a

• A)decrease in total revenue of $200,so the price elasticity of demand is greater than 1 in this price range.
• B)decrease in total revenue of $200,so the price elasticity of demand is less than 1 in this price range.
• C)decrease in total revenue of $120,so the price elasticity of demand is less than 1 in this price range.
• D)decrease in total revenue of $120,so demand is elastic in this price range.

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Definitions:

Variable Costs

Costs that vary directly with the level of production or service provision, such as materials and labor.

Output

The quantity of goods or services produced by a firm or industry.

Total Variable Costs

The sum of expenses that change in proportion to the activity of a business, such as costs for raw materials and labor, which vary with production volume.

Firm Produces

The process by which a business combines inputs, such as labor and capital, to create outputs, or goods and services, for consumption.