Answer:
B. fixed cost per unit increases
Explanation:
As we know that
If the production volume increases, the fixed cost per unit is decreases as it reflect an inverse relationship between the fixed cost per unit and the production volume
Let us take an example
Fixed cost = $20,000
Production volume = 100,000
Decrease in production volume = 80,000
So, the fixed cost per unit in the first case is
= 20,000 ÷ $100,000
= $0.2
And, the fixed cost per unit in the second case is
= 20,000 ÷ $80,000
= $0.25
Therefore, the fixed cost per unit increases
Answer:
The correct answer is letter "D": normal goods.
Explanation:
Normal Good is any good or service that sees its increase in demand as a result of an increase in income. Normal goods are defined as having an income elasticity coefficient of demand (<em>percentage change in quantity demanded by the percentage change in price</em>) which is lower than one (1) but is still a positive number.
<em>Consumer staples such as food, drugs, beverages, </em>and <em>basic household products</em> are considered normal goods.
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For produced goods, supply is typically more elastic over the long term compared to the short term because it is generally believed that over the long term, all production factors can be used to increase supply, whereas over the short term, only labor can be increased and even then, changes may be prohibitively expensive.
Because consumers don't have time to look for alternatives, demand is typically more price inelastic in the short term. Consumers eventually grow more aware of their options. The responsiveness of demand to a change in price is measured by price elasticity of demand. Electricity demand's price elasticity is higher over the long term and lower over the short term.
To learn more about long term, click here..
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