If the Price of a Good Rises by 10 Percent

question 84

Multiple Choice

If the price of a good rises by 10 percent and quantity demanded falls by 20 percent,we can predict that

• A)The company's total revenue will increase.
• B)The company's total profit will rise.
• C)The company's total revenue will decrease.
• D)The company's total revenue will remain the same.

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Definitions:

Fixed Costs

Expenses that do not change with the level of production or business activity, such as rent, salaries, and utility charges.

Marginal Cost

The charge for the production of one additional unit of a product or service.

Average Total Cost

The aggregate expense of manufacturing, including both fixed and variable costs, divided by the total number of units produced.

Marginal Cost

The price associated with manufacturing one more unit of a product or service.