If Demand Is Elastic

question 6

Multiple Choice

If demand is elastic

• A) then it changes very little in response to a price change.
• B) then it changes very much in response to a price change.
• C) then demand is zero.
• D) then demand is infinite.

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Definitions:

Variable Manufacturing

Costs in manufacturing that change in proportion to the volume of production, such as materials and labor.

Materials Price Variance

The difference between the actual cost of materials used in production and the budgeted cost of materials, based on standard prices and actual quantities purchased.

Variable Manufacturing

Costs in manufacturing that vary directly with the level of production, such as raw materials and direct labor costs.

Variable Overhead Rate

The rate at which variable overhead costs are allocated to each unit of production, based on a certain activity level.