For a Product with a Constant or Gently Increasing Opportunity

question 342

Multiple Choice

For a product with a constant or gently increasing opportunity cost of producing additional units,as more is produced,we expect that

• A) demand is price elastic.
• B) supply is price elastic.
• C) demand is price inelastic.
• D) supply is price inelastic.
• E) demand is unit elastic.

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Definitions:

Activity Index

A measure used to understand the level of activity in a particular area, such as production or sales, often used in planning and forecasting.

Contribution Margin

The difference between sales revenue and variable costs, used to cover fixed costs and generate profit.

Target Net Income

The specific amount of net income that a company aims to achieve within a certain period.

Margin Of Safety

A financial ratio or metric that measures the difference between actual sales and the breakeven point, indicating the extent to which sales can decline before a business incurs a loss.