All Things Equal, the Price Elasticity of Supply

question 129

Multiple Choice

All things equal, the price elasticity of supply

• A) will be greater in the short run than in the long run.
• B) will be greater in the long run than in the short run.
• C) is the same for the short run and the long run.
• D) approaches zero in the long run.

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Definitions:

Price Variance

The difference between the actual price paid for a good or service and its expected (budgeted) price.

Standard Price

The predetermined cost that a company expects to pay for goods or services under normal conditions.

Direct Labor Rate Variance

The variance between the real expense of direct labor and its anticipated (or standard) price, employed in analyzing manufacturing costs.

Actual Costs

The actual expenses incurred in the production of goods or services, including all direct and indirect costs.