A Local Krispy Kreme Doughnut Shop Reduced Its Prices by 10

question 130

Multiple Choice

A local Krispy Kreme doughnut shop reduced its prices by 10 percent, and as a result, the quantity of doughnuts sold increased by 25 percent. Over this range, the absolute value of the price elasticity of demand was

• A) 0.4.
• B) 1.
• C) 2.
• D) 2.5

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Definitions:

Cost Of Production Report

A report prepared periodically by a processing department, summarizing (1) the units for which the department is accountable and the disposition of those units and (2) the costs incurred by the department and the allocation of those costs between completed and incomplete production.

Cost Of Goods Sold

The cost of finished goods available for sale minus the ending finished goods inventory.

Equivalent Units

A concept used in cost accounting to express the amount of work done by incomplete units in terms of fully completed units.

First-In, First-Out

An inventory valuation method that assumes the first items placed in inventory are the first sold.