If a 1 Percent Decrease in Price Results in More

question 52

Multiple Choice

If a 1 percent decrease in price results in more than a 1 percent increase in quantity demand, demand is

• A) cross-price elastic.
• B) price inelastic.
• C) price elastic.
• D) status quo elasticity.
• E) derived demand inelastic.

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Definitions:

Fixed Factory Overhead

Refers to the consistent, non-variable costs associated with operating a manufacturing facility, such as rent, salaries, and utility expenses.

Static Budget

A budget that remains unchanged over the budget period and is not adjusted for actual levels of activity.

Flexible Budget

A budget that adjusts or varies with changes in the volume of activity, production levels, or other operational factors.

Direct Materials

Raw materials that can be directly traced to the production of goods or services and are considered variable costs.