Table 5-1
Suppose a Coffee Shop Faces the Following Demand

question 21

Multiple Choice

Table 5-1
Suppose a coffee shop faces the following demand schedule for coffee. $\begin{array}{|c|c|}\hline \text { Price per coffee (\$) } & \text { Quantity demanded } \\\hline 4.00 & 200 \\\hline 3.00 & 600 \\\hline 2.50 & 800 \\\hline 2.00 & 1000 \\\hline 1.50 & 1200 \\\hline 1.00 & 1400 \\\hline\end{array}$
-Refer to Table 5-1.Notice that if the price is lowered from $2.00 to $1.50, total revenue falls from $2000 to $1800.This means that over this price range, the demand for coffee must be:

• A)price elastic
• B)price inelastic
• C)price unit elastic
• D)income elastic

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Definitions:

Indirect Labor

Labor costs of workers who assist in or facilitate the manufacturing process but do not directly work on the product.

Prime Costs

Direct materials and direct labor costs that are directly associated with the production of goods.

Factory Overhead Costs

Expenses related to operating a factory that cannot be directly traced to specific units produced, such as electricity, maintenance, and rent of the factory space.

Direct Labor Costs

Costs that are directly associated with the production of goods or services, typically wages paid to workers directly involved in manufacturing or production.