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. 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

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.  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

When the sales volume of luxury goods increases with an increase in price, we can assume that the relationship between price and sales is a convex function. This is because the marginal utility of the good increases with price, and consumers are willing to pay more for the good at higher prices, leading to an increase in sales volume. Therefore, the best choice is C, a convex function.

Typically,the Sales Volume Declines with an Increase of a Product