Assume That the Price Elasticity of Demand Equals 0

question 166

Multiple Choice

Assume that the price elasticity of demand equals 0.4 (e_d = 0.4) . Given a 10 percent increase in price, there will be a

• A)40 percent increase in the quantity demanded.
• B)4 percent decrease in the quantity demanded.
• C)40 percent decrease in the quantity demanded.
• D)4 percent increase in the quantity demanded.
• E)2.5 percent decrease in the quantity demanded.

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Definitions:

Materials Price Variance

Materials Price Variance is the difference between the actual cost of materials and the standard cost, indicating how much more or less was paid for materials than expected.

September

The ninth month of the Julian and Gregorian calendars, known for marking the transition from summer to autumn in the Northern Hemisphere.

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the standard quantity expected to be used, multiplied by the standard cost per unit of material.

Labor Efficiency Variance

The difference between the actual hours worked and the standard hours expected, multiplied by the standard labor rate.