Which of the Following Is Correct

question 335

Multiple Choice

Which of the following is correct?

• A) The cross elasticity of demand for substitute goods is positive.
• B) The cross elasticity of demand for substitute goods is negative.
• C) The cross elasticity of demand equals the percentage change in demand divided by the percentage change in income.
• D) The income elasticity of demand for a normal good is negative.
• E) The cross elasticity of demand for normal goods is positive.

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Definitions:

Manufacturing Overhead

All manufacturing costs other than those accounted for as direct labor and direct materials. Includes indirect costs such as maintenance, utilities, and rent in the production process.

Indirect Materials

Materials used in the production process that cannot be directly linked to specific products, such as lubricants and cleaning supplies.

Direct Materials Cost

The cost of raw materials and components used directly in the manufacturing of a product.

Schedule Of Cost Of Goods Sold

A schedule that contains three elements of product costs—direct materials, direct labor, and manufacturing overhead—and that summarizes the portions of those costs that remain in ending Finished Goods inventory and that are transferred out of Finished Goods into Cost of Goods Sold.