A 4 Percent Reduction in the Price of a Product

question 64

Multiple Choice

A 4 percent reduction in the price of a product has zero effect on the dollar amount of consumer expenditure on the product. The price elasticity of demand is

• A)zero.
• B)greater than zero.
• C)greater than zero but less than 1.
• D)equal to 1.

---

Definitions:

Cash Disbursements

The outflow of cash for expenses, including paying bills, employees, and suppliers, among others.

Direct Labor-hours

The sum of working hours of employees directly contributing to the production activities.

Cash Disbursements

Payments made in cash by a business, including operating expenses, purchasing of assets, and other financial activities.

Manufacturing Overhead

All manufacturing costs that are not directly related to the production of a product, including expenses such as rent, utilities, and salaries for managers.