Suppose That Along a Linear Demand Curve,the Elasticity of Demand

question 359

Multiple Choice

Suppose that along a linear demand curve,the elasticity of demand is equal to 1 when the price is $4 and the quantity is 100 units.Then the

• A) total revenue is at its maximum when 100 units are produced.
• B) marginal revenue is positive at 100 units.
• C) marginal revenue is negative at 100 units.
• D) Both answers A and B are correct.
• E) Both answers A and C are correct.

---

Definitions:

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity levels, allowing for better budget-to-actual comparisons.

Favorable Spending Variance

A situation in which actual spending is less than the budgeted or projected amount, indicating cost efficiency.

Actual Cost

The real cost incurred in the production of goods or services, including all direct and indirect expenses.

Static Planning Budget

A budget based on a single level of activity, not adjusted for changes in activity levels during the period.