Question

When elasticity of demand is more than 1, it is relatively easy to raise your price because consumers are more concerned with quality than with cost.

True

False

n the Fibertec case, you were asked to compare 2 cash flows --- one for manufacturing in-house; the other for contracting out. The next best alternative that is sacrificed in making an economic choice is

		opportunity cost
		variable cost
		cost-benefit anslysis
		fixed cost

It is easier to evaluate a firm’s tangible resources than its intangible resources.

True

False

Answer 1

When elasticity of demand is more than 1, it means that the change in demand will be higher than the change in price

Hence, the given statement is false

It is not easy to raise the price, because it will lead to a higher Fall in demand

The next best alternative sacrificed is OPPORTUNITY COST

opportunity cost is the amount of benefit foregone in accepting one alternative

The given statement is TRUE

Tangible resources are those which can be seen and touched while intangible resources cannot be seen and touched.

Hence, it is earlier to evaluate tangible resources.