A Decrease in the Price of a Resource Would Cause

question 5

Multiple Choice

A decrease in the price of a resource would cause

• A) producers to substitute other inputs for the resource.
• B) the cost of products made from the resource to fall.
• C) producers to use more of the resource.
• D) none of the above.
• E) both b and c above.

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Definitions:

Adjusted Cost

The modification of the historical cost of an asset to reflect changes due to depreciation or amortization.

Goods Sold

The total quantity of products a company has sold during a particular period; it is closely related to "cost of goods sold" but focuses on the volume rather than the cost.

Work in Process

Inventory items that are partially completed, residing between raw material and finished goods stages in the production process.

Underapplied

Refers to the condition where the actual manufacturing overhead costs exceed the applied manufacturing overhead costs in accounting.