A Rise in the Price of a Product Lowers the Total

question 492

Multiple Choice

A rise in the price of a product lowers the total revenue from the product if the

• A) income elasticity of demand exceeds 1.
• B) good is an inferior product.
• C) demand for the product is inelastic.
• D) demand for the product is elastic.

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Definitions:

Predetermined Manufacturing Overhead

An estimated overhead rate calculated before the accounting period begins, used to allocate manufacturing overhead costs to products.

Machine-hours

A measure of production time, used in cost accounting, representing the hours that a machine operates.

Predetermined Overhead Rate

This refers to the rate used to allocate manufacturing overhead costs to individual products or job orders, calculated before the accounting period begins based on estimated costs and activity levels.

Machine-hour

A measure of the amount of time a machine is operated, used in calculating manufacturing costs and setting production schedules.