Question

In: Economics

If to increase sales a firm must lower the price on the last unit sold and all previous units as well then it faces:


If to increase sales a firm must lower the price on the last unit sold and all previous units as well then it faces:



a. a horizontal demand curve



b. a vertical demand curve



c. an upward sloping demand curve



d. a downward sloping demand curve


Demand increases if:



a. the average income of buyers in a market increases



b. the relative price of a substitute increases



c. there are more buyers in the market



d. all of the above



The price elasticity of demand measures:



a. how sensitive demand is to a change in price



b. how sensitive supply is to a change in price



c. how sensitive quantity demanded is to a change in price



d. how sensitive quantity supplied is to a change in price



When demand for a product is inelastic, a decrease in price:



a. decreases the firm's total revenue



b. increases the firm;s total revenue



c. leaves the firm's total revenue unchanged



d. increases the firm's total revenue more than it decreases



When the demand for a firm's product is elastic, a price decrease:



a. increases the firm's total revenue



b. decreases the firm's total revenue



c. leaves the firm;s total revenue unchanged



d. decreases the firm's total revenue more than it increases

Solutions

Expert Solution

1) If to increase sales a firm must lower the price on the last unit sold and all previous units as well then it faces an downward demand curve.answer. (A)

The monopolist firm selling the product faces a downward slope. This is because the firm will have to reduce the price of the product if it wants to sell more.

2) Generally Demand increases due to the below factors... answer is all the above.

Price
Usually viewed as the most important factor that affects demand. Products have different sensitivity to changes in price.

Income levels
When an individual’s income goes up, their ability to purchase goods and services increases, and this causes demand to increase. When incomes fall there will be a decrease in the demand for most goods

Consumer tastes and preferences
Changing tastes and preferences can have a significant effect on demand for different products. Persuasive advertising is designed to cause a change in tastes and preferences

Competition
Competitors are always looking to take a bigger share of the market, perhaps by cutting their prices or by introducing a new or better version of a product.

3) The price elasticity of demand measures the responsiveness of a good's quantity demanded to a change in its price.

​​​​​Answer is C.

4)When demand for a product is inelastic, a decrease in price would decrease firm total revenue (a)

It would indicate that the firm should not reduce the price of its goods as there is no beneficial outcome in doing so.

5)When the demand for a firm's product is elastic, a price decrease will result in increasing the total revenue of the firm( a)

​​​​

Rahul Sunny answered 2 years ago
Next > < Previous

Related Solutions

Currently, the sales of a company is $12,800,000 per year: price per unit $12.8; units sold...
Currently, the sales of a company is $12,800,000 per year: price per unit $12.8; units sold 1,000,000 per year; direct cost per unit $9.60; A/R 25% of $ sales (ignore A/P); inventory 25% of direct cost; cash operating expense $890,000 per year; annual depreciation $600,000; tax rate 34%; capital expenditure is zero. Now you are estimating the free cash flow for the next year when the unit sales price changes to $15.36, thus changing $ sales; however, the number of...
Date Transaction Units In Unit Cost Total Units Sold Sales Price Total 7/1 Balance 100 4.10...
Date Transaction Units In Unit Cost Total Units Sold Sales Price Total 7/1 Balance 100 4.10 410 7/6 Purchase 800 4.20 3,360 7/7 Sale 300 7.00 2,100 7/10 Sale 300 7.30 2,190 7/12 Purchase 400 4.50 1,800 7/15 Sale 200 7.40 1,480 7/18 Purchase 300 4.60 1,380 7/22 Sale 400 7.40 2,960 7/25 Purchase 500 4.58 2,290 7/30 Sale 200 7.50 1,500 Totals 2,100 9,240 1,400 10,230 Compute FIFO, LIFO, Average for the perpetual inventory system. Be sure to do...
Date Transaction Units In Unit Cost Total Units Sold Sales Price Total 7/1 Balance 100 4.10...
Date Transaction Units In Unit Cost Total Units Sold Sales Price Total 7/1 Balance 100 4.10 410 7/6 Purchase 800 4.20 3,360 7/7 Sale 300 7.00 2,100 7/10 Sale 300 7.30 2,190 7/12 Purchase 400 4.50 1,800 7/15 Sale 200 7.40 1,480 7/18 Purchase 300 4.60 1,380 7/22 Sale 400 7.40 2,960 7/25 Purchase 500 4.58 2,290 7/30 Sale 200 7.50 1,500 Totals 2,100 9,240 1,400 10,230 Compute FIFO, LIFO, Average for the periodic inventory system. Be sure to do...
All Metal Bearings had sales of 12,000 units at $30 per unit last year. The marketing...
All Metal Bearings had sales of 12,000 units at $30 per unit last year. The marketing manager projects a 15 percent increase in unit-volume sales this year with a 10 percent price decrease (due to a price reduction by a competitor). Returned merchandise will represent 5 percent of total sales. What is your net dollar sales projection for this year? Net sales           $ PS - please explain every step.
Suppose that a perfectly competitive firm faces a market price of ​$5 per​ unit, and at...
Suppose that a perfectly competitive firm faces a market price of ​$5 per​ unit, and at this price, the​ upward-sloping portion of the​ firm's marginal cost curve crosses its marginal revenue curve at an output level of 1,500 units. If the firm produces 1,500 ​units, its average variable costs equal ​$5.50 per​ unit, and its average fixed costs equal ​$0.50 per unit.  What is the​ firm's profit-maximizing​ (or loss-minimizing) output​ level? nothing. ​(Enter your response as a whole number long dash—...
Easy Breeze company produced 100,000 units, sold 90,000 units at a selling price per unit of...
Easy Breeze company produced 100,000 units, sold 90,000 units at a selling price per unit of $450, and incurred the following manufacturing costs: Direct Materials = $40 per unit Direct Labor = $18 per unit Factory overhead costs: Variable Factory Overhead = $23 per unit Fixed Factory overhead = $250,000 Semi-variable Factory overhead cost is $70,000. The company utilized 14,000 machine hours during this period. The following additional information is provided semi-variable factory overhead into variable and fixed factory overhead...
Easy Breeze company produced 100,000 units, sold 90,000 units at a selling price per unit of...
Easy Breeze company produced 100,000 units, sold 90,000 units at a selling price per unit of $450, and incurred the following manufacturing costs: Direct Materials = $40 per unit Direct Labor = $18 per unit Factory overhead costs: Variable Factory Overhead = $23 per unit Fixed Factory overhead = $250,000 Semi-variable Factory overhead cost is $70,000. The company utilized 14,000 machine hours during this period. The following additional information is provided semi-variable factory overhead into variable and fixed factory overhead...
Snowcome Company estimates that quarterly unit sales will increase by 15% assuming a unit selling price...
Snowcome Company estimates that quarterly unit sales will increase by 15% assuming a unit selling price of $30. Prepare a Sales Budget Quarterly for the upcoming year, 2018. Last Years quarterly sales figures are Sales 2017 Q1- 75076 Q2- 70041 Q3- 65081 Q4- 80037 2. Snowcome would like to have an ending inventory of finished goods equal to 10% of expected sales for the following period. Assuming the ending inventory of finished goods on December 31, 2017 is 8,500 units....
A total of 30,000 units were sold last year. The contribution margin per unit was $2...
A total of 30,000 units were sold last year. The contribution margin per unit was $2 and fixed expenses totaled $20,000 for the year. This year fixed expenses are expected to increase to $26,000, but the contribution margin per unit will remain unchanged at $2. How many units must be sold this year to earn the same profit as earned last year?
Last year, Alpha Company sold 3,600 units of a single product at a price of $100...
Last year, Alpha Company sold 3,600 units of a single product at a price of $100 per unit. The company variable cost per unit was $75, its fixed cost for the year were $40,000. How many units must ALPHA sell to break even? What is ALPHA’s operating leverage? How much will ALPHA need to sell in sales dollars to earn a target profit of $80,000? If ALPHA spends $18,000 and a proposed marketing campaign, it expects that sales would increase...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT