Answer:
To increase its revenue, transit authority should lower the fare.
Explanation:
The 'elasticity of demand' measures the change in consumers response in quantity he demands as a result of the change in price, other factors remaining same.
A product is called elastic if with the increase or decrease in price, there is a drastic change in the quantity demand of the product. If the transit authority will lower its fare, then their revenue will increase as the elasticity of demand for bus trip is 1.2. By lowering the fare, the demand would increase and their revenue will increase.
Answer:
Sales less variable production, variable selling, and variable administrative expenses.
Explanation:
On a contribution margin income statement the variable administrative and variable selling are considered as variable cost and used to determinate the contribution margin.
Contribution margin =
sales revenue - total variable cost
the fixed cost are listed below the contriution,
once subtracted from the contribution, the rest is the net income.
Answer: Option (d) is correct.
Explanation:
Correct option: Only a perfectly competitive firm operates at its efficient scale.
In the perfectly competitive market and in the long run, the firms who are making losses will exit the market and those firms who are able produce at a point where price is equal to the average total cost will exist in the market.
However, monopolistic firms operates at a below efficient level of production and with an excess capacity.
Competitive firms are generally enjoys the productive efficiency in the long run because these firms have the capability to produce at a lower average total cost.
Answer:
(A) is the manner in which the burden of a tax is shared among participants in a market
Explanation:
Tax incidence refers to the burden of a tax between buyers or sellers or other stakeholders.
When price elasticity of supply is greater than price elasticity of demand, i.e a change in price causes supply to change more than demand, the tax incidence is said to be more burdensome for the buyers and vice versa.
It represents the distribution of tax burden to various sections of a society such as producers, consumers, etc.
For example, if taxes and duties are raised on alcohol or cigarettes, the producers shall transfer such burden on the consumers by covering their margin and raising prices. Thus, in such a case, the tax incidence would be borne by the consumers.
