The Price Elasticity of Supply Measures How Responsive

question 60

Multiple Choice

The price elasticity of supply measures how responsive

• A)equilibrium price is to equilibrium quantity.
• B)sellers are to a change in buyers' income.
• C)sellers are to a change in price.
• D)consumers are to the number of substitutes.

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Definitions:

Markup

The amount added to the cost of goods to cover overhead and profit; a percentage of cost.

Direct Labor

Labor costs directly associated with the manufacture of specific goods or the delivery of specific services, representing wage expenses for personnel involved in production.

Absorption Costing

An accounting strategy where the price of manufacturing a product is determined by adding up expenses on direct materials, direct labor, and every overhead cost, be it variable or fixed.

Markup

The extra charge applied to the acquisition cost of items intended to offset operating costs and secure a profit, which defines their market price.