If the Demand for a Life-Saving Drug Was Perfectly Inelastic

question 13

Multiple Choice

If the demand for a life-saving drug was perfectly inelastic and the price doubled, what would happen to the quantity demanded?

• A)It would also double.
• B)It would decrease by 50%.
• C)It would be cut in half.
• D)It would remain constant.

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Definitions:

Materials Price Variance

The deviation between the actual cost of direct materials and the standard cost, multiplied by the quantity purchased.

Variable Overhead Rate

The rate at which variable overhead costs are allocated to a unit of production, often based on direct labor hours or machine hours.

Fixed Overhead Budget

A financial plan that projects the expected fixed costs required to support the operations of a business.

Standard Machine-Hours

A predetermined measure of the amount of machine time required to produce a unit of product, used in costing and budgeting.