Along a Downward-Sloping Linear Demand Curve

question 139

Multiple Choice

Along a downward-sloping linear demand curve,

• A)slope is constant and elasticity is changing
• B)slope is changing and elasticity is constant
• C)both slope and elasticity are constant
• D)both slope and elasticity are changing
• E)no generalizations can be made about slope

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Definitions:

Cost Behavior

The way different types of production costs change when there is a change in level of production activity.

Contribution Margin

The difference between a company's sales revenue and its variable costs, indicating how much revenue contributes to covering fixed costs.

Net Income

The total profit of a company after all expenses, including taxes and operating costs, have been subtracted from total revenues.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the proportion of fixed versus variable costs a company has.