Exhibit 16.2.Typically,the sales volume declines with an increase of a product price.It has been observed,however,that for some luxury goods the sales volume may increase when the price increases.The following Excel output illustrates this rather unusual relationship. Refer to Exhibit 16.2.For the considered range of the price,the relationship between Price and Sales should be described by a:
A)concave function.
B)hyperbola.
C)convex function.
D)linear function.

Question

Exhibit 16.2.Typically,the sales volume declines with an increase of a product price.It has been observed,however,that for some luxury goods the sales volume may increase when the price increases.The following Excel output illustrates this rather unusual relationship.  Refer to Exhibit 16.2.For the considered range of the price,the relationship between Price and Sales should be described by a:
A)concave function. 
B)hyperbola. 
C)convex function. 
D)linear function.

Quizplus · Accepted Answer

The Excel output shows a curve that is bending upwards, indicating a positive correlation between price and sales volume, but at a decreasing rate, which is consistent with a convex function. A concave function would show a decreasing rate of change, which is not the case. A hyperbola would show a different pattern altogether. A linear function would show a constant rate of change, which is not consistent with the data provided.