When Consumers' Tastes and Preferences for a Product Improve and the Supply

question 32

Multiple Choice

When consumers' tastes and preferences for a product improve and the supply remains unchanged:

• A) the quantity demanded of the product falls.
• B) the supply curve becomes steeper.
• C) the price of the product reduces.
• D) the equilibrium quantity increases.

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Definitions:

Variable Costing

An accounting method that only considers variable costs - costs that change with production volume - in calculating the cost of goods sold.

Direct Materials Costs

The expenses for raw materials that are directly used in the manufacturing of a product.

Variable Costing

An accounting method that includes only variable production costs (direct materials, direct labor, and variable manufacturing overhead) in the cost of a unit of product.

Unit Product Cost

The calculated cost to produce one unit of a product, including direct materials, labor, and overhead.