Suppose a Frost Destroys the Alfalfa Crop in Manitoba but Farmers

question 106

Multiple Choice

Suppose a frost destroys the alfalfa crop in Manitoba but farmers see an increase in their revenues.Which of the following best explains this?

• A)The decrease in supply led to huge price increases.
• B)Alfalfa is a necessity.
• C)The demand for alfalfa is price inelastic.
• D)The cross-price elasticity between alfalfa and most other substitute sprouts is very low.

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Definitions:

Total Manufacturing Costs

The complete sum of all expenses directly involved in the production of a product, including direct materials, direct labor, and manufacturing overhead.

Markup

Markup refers to the difference between the selling price of a good or service and its cost, expressed as a percentage over the cost. It is used to cover expenses and generate profit.

Accumulated Depreciation

The total amount of a tangible fixed asset's cost that has been allocated as depreciation expense since the asset was put into use.

Differential Profit

The difference in profit between two business choices, helping in decision-making by highlighting the financial impact of each option.