The Demand for a Factor of Production Will Be More

question 68

Multiple Choice

The demand for a factor of production will be more inelastic

• A) when the cost of the factor is small relative to the total cost of the product.
• B) the more elastic the demand for the final product.
• C) the easier it is to substitute other resources for the factor.
• D) the more elastic the supply of products produced with the resource.

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Definitions:

Direct Costs

Costs that can be directly traced to producing specific goods or services, such as direct labor and direct materials.

Direct Manufacturing Cost

Expenses directly tied to the production of specific goods, including materials and labor.

Relevant Range

The range of activity within which the assumptions about fixed costs and variable unit costs are valid for purposes of budgeting and decision-making.

Direct Costs

Expenses that can be directly traced to the production of specific goods or services, such as raw materials and labor.