A Value of Infinity for the Elasticity of Supply of Some

question 15

Multiple Choice

A value of infinity for the elasticity of supply of some product implies that

• A)the supply curve is vertical.
• B)supply is very unresponsive to price.
• C)the supply curve is horizontal.
• D)the product will be supplied at any price.
• E)no product will be supplied at any price.

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Definitions:

Direct Materials

Raw materials that are directly traceable to the production of specific goods or services and are an integral part of the finished product.

Variable Factory Overhead

Variable factory overhead consists of production costs that vary with the level of output, such as utilities and indirect materials.

Fixed Costs

Costs that tend to remain the same in amount, regardless of variations in the level of activity.

Differential Revenue

The additional revenue generated from choosing one alternative over another in decision-making processes.