Why Are Materials That Represent Only a Small Percentage of the Total

question 30

Essay

Why are materials that represent only a small percentage of the total cost of manufacturing a product more likely to have inelastic demand than major components?

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Definitions:

Operating Expenses

Costs associated with the day-to-day operations of a business or organization.

Wholesale Price

The cost of goods sold in large quantities, usually to retailers rather than directly to consumers.

Mark-up on Cost

The percentage added to the cost price of goods to cover overhead and profit.

Lettuce

A leafy green vegetable commonly used in salads and sandwiches.