The Number of CDs Purchased Increased by 5 Percent When

question 193

Multiple Choice

The number of CDs purchased increased by 5 percent when consumer income increased by 10 percent. Assuming other factors are held constant, CDs would be classified as

• A) inferior goods.
• B) normal goods.
• C) elastic goods.
• D) inelastic goods.

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Definitions:

Prime Cost

The sum of direct materials and direct labor costs that are directly attributable to the production of a product.

Product Cost

The total expenditure incurred to produce a product, including direct materials, direct labor, and overhead.

Manufacturing Plant

A facility used for the production of goods, equipped with machinery and labor force necessary for the manufacturing process.

Ending Finished Goods Inventory

Ending finished goods inventory is the value of all completed products that have not been sold by the end of an accounting period, ready for delivery to customers.