Pizza Hut Lowers the Price of Its Pizza

question 65

Multiple Choice

Pizza Hut lowers the price of its pizza.The price elasticity of demand for Pizza Hut pizza equals 0.3.What happens to the Pizza Hut's total revenue?

• A) nothing
• B) It increases.
• C) It decreases.
• D) It becomes negative.
• E) It might change, but more information is needed to determine if it increases, decreases, or does not change.

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Definitions:

Depreciation Expense

An accounting method of allocating the cost of a tangible or physical asset over its useful life to account for declines in value.

Half-Year Convention

The half-year convention is a method in depreciation accounting where an asset is assumed to have been in service for half the year, regardless of when it was actually acquired during the fiscal year.

Incremental Depreciation

The additional depreciation expense recorded when there is a change in the estimated useful life or salvage value of an asset.

Opportunity Costs

The cost of foregone alternatives, representing the benefits one could have received by taking an alternative action.