According to the Law of Demand, Which of the Following

question 96

Multiple Choice

According to the law of demand, which of the following is true?

• A) If prices decrease, customers will buy more.
• B) Customers are not aware of small price changes.
• C) The effect on demand from changes in price cannot be accurately predicted.
• D) Demand equals supply.
• E) If prices increase, customers will buy more.

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Definitions:

Direct Labor-Hours

A measure of the total hours worked by employees directly involved in the manufacturing process, used as a base for allocating overhead costs.

Manufacturing Overhead

All indirect costs associated with the production process, such as utilities, rent, and salaries for administrative staff, not directly tied to the production of a specific product.

Predetermined Overhead Rate

A rate calculated before a period begins, used to allocate manufacturing overhead costs to products based on a chosen activity base, like labor hours or machine hours.

Machine-Hours

A measure of production output or activity based on the number of hours machines are operational.