The Optimal Markup on Variable Cost

question 12

Multiple Choice

The optimal markup on variable cost:

• A) increases as unit sales become more sensitive to price.
• B) decreases as unit sales become more sensitive to price.
• C) is not affected by the price sensitivity of a product's sales volume.
• D) is equal to [ed/(1 + ed)] + 1, where ed is the price elasticity of demand.

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Definitions:

Forgetting Curve

A graph that describes the rate at which information is lost over time when there is no attempt to retain it.

Forgetting Rate

The speed at which information is lost from memory over time, an aspect of memory decay.

Intrusion Errors

Memory mistakes in which elements that were not part of the original information get mixed into (“intrude” into) someone’s recall.

Recall

The act of retrieving information or memories from the past, often without the stimulus that initially encoded the memory.