Assume a Person Reveals the Following Demand Conditions

question 19

Multiple Choice

Assume a person reveals the following demand conditions. At a price of $10, quantity demanded is zero; and at a price of $1, quantity demanded is 10 units.

• A) The consumer surplus will be the area under the entire demand curve.
• B) Demand decreases as the price decreases.
• C) The lower the price the smaller the consumer surplus.
• D) The consumer surplus will be zero at a price of $10.
• E) The consumer surplus is zero at a price of $1.

---

Definitions:

Direct Labor Time

The amount of time spent by employees directly working on producing a product or service.

Overhead Cost

General, administrative, and selling expenses that are not directly tied to any specific product or service but are necessary for running the business.

Allocation Base

A measure or statistic that is used to distribute costs among different departments, projects, or products.

Overhead

Refers to the ongoing business expenses not directly tied to creating a product or service, including rent, utilities, and administrative costs.