What Does It Tell You If Demand Is Price Elastic

question 13

Multiple Choice

What does it tell you if demand is price elastic?

• A) A price decrease increases revenue.
• B) The percentage change in quantity demand is less than the change in price.
• C) The value of price elasticity is less than 1.
• D) There are likely to be few substitutes.

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Definitions:

Labour Efficiency Variance

The difference between the actual hours worked and the standard hours expected to produce a certain number of units, multiplied by the standard hourly wage rate.

Actual Direct Labour Rate

This measures the actual cost per hour of labor directly involved in the manufacturing process.

Materials Price Variance

The difference between the actual cost of direct materials purchased and the standard cost, multiplied by the quantity purchased.

Standard Quantity

The predetermined amount of materials or resources expected to be used in a production process or manufacturing of a product.