If the Price Elasticity of Supply Is Greater Than 1

question 14

Multiple Choice

If the price elasticity of supply is greater than 1:

• A) supply is price-elastic.
• B) supply is price-inelastic.
• C) supply is price unit-elastic.
• D) the quantity supplied is relatively unresponsive to price changes.

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Definitions:

Direct Materials

Direct Materials are raw materials that are directly traceable and allocable to a finished product in the manufacturing process.

Work in Process Inventory

Items currently undergoing production but have not yet reached completion.

Lower of Cost

A principle requiring that inventory be recorded at the lower of its historical cost or current market value.

Net Realisable Value

The estimated selling price in the ordinary course of business minus any costs necessary to make the sale, used primarily in inventory valuation.