If the Demand for a Good Increases,the Demand for the Factors

question 18

Multiple Choice

If the demand for a good increases,the demand for the factors used to produce the good

• A) increases.
• B) decreases.
• C) stays the same.
• D) could increase, decrease, or stay the same depending on whether the demand for the good is elastic, inelastic, or unit elastic.
• E) None of the above answers is correct.

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Definitions:

Relevant Range

The range of activity within which the assumptions about fixed and variable costs are valid for a specific business.

Mixed Costs

Expenses that have both fixed and variable components, changing with the level of production or sales activity but not in direct proportion.

Differential Costs

The difference in cost between two alternative decisions or changes in levels of operation.

Variable

An element that can change or vary, often used in mathematical modeling, programming, and statistical analysis to represent changeable data.