Products X,Y,and Z Have Price Elasticities of 3

question 192

Multiple Choice

Products X,Y,and Z have price elasticities of 3.0,0.80,and 1.0 respectively.Total revenue decreases if the price of

• A) product X falls.
• B) product Y falls.
• C) product Z falls.
• D) product X or product Z falls.
• E) product Y or product Z falls.

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Definitions:

Average Fixed

Average Fixed refers to the average fixed costs per unit of output, which decreases as the quantity of output increases because total fixed costs are spread over a larger number of units.

Average Variable

Pertains to the expenses that change in proportion to the activity of a business, averaged per unit of production or operation.

Average Total Cost

The average cost per unit of output, calculated by dividing the total production cost by the number of units produced.

Producing Purses

The process of manufacturing handbags, which involves design, selection of materials, and assembly.