Demand Is Perfectly Inelastic When

question 6

Multiple Choice

Demand is perfectly inelastic when

• A)a good has perfect substitutes.
• B)an increase in supply does not change total revenue.
• C)a decrease in supply decreases total revenue.
• D)the price elasticity of demand is negative.
• E)an increase in supply does not change the equilibrium quantity.

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Definitions:

Work in Process

Also known as work in progress, it denotes the cost of unfinished goods in manufacturing at any given time.

Direct Labour Cost

The wages paid to workers who are directly involved in the manufacturing or production process.

Direct Materials Cost

Direct materials cost refers to the expenditure on the raw materials that are directly identifiable and allocable to the production of a product.

Overapplied Overhead

This refers to a situation in which the allocated overhead cost is greater than the actual overhead cost incurred.