The Elasticity of Demand Measures How Sensitive The

question 214

Multiple Choice

The elasticity of demand measures how sensitive the:

• A) price is to a change in quantity demanded.
• B) quantity demanded is to a change in price.
• C) price is to a change in the quantity supplied.
• D) demand is to a change in the number of suppliers.

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Definitions:

Opportunity Cost

The cost of forgone alternatives when one option is chosen over another.

Administrative Expense

Costs related to the general operation and administration of a business, including salaries of executive personnel, office supplies, and utilities.

Direct Labor Cost

The total cost of wages paid to labor directly involved in the production of goods or services.

Manufacturing Overhead Cost

Expenses related to manufacturing that are not directly tied to a specific product, such as factory rent and utilities.