A Firm with a Highly Elastic Demand for Its Products

question 74

Multiple Choice

A firm with a highly elastic demand for its products

• A)will be unable to pass increased costs following unfavorable changes in the exchange rate without significantly lowering the quantity sold.
• B)will be able to raise prices following unfavorable changes in the exchange rate without significantly lowering the quantity sold.
• C)can easily pass increased costs on to consumers.
• D)will sell about the same amount of product regardless of price.

---

Definitions:

Non-Cash Charges

Expenses reported on the income statement that do not require an actual cash outflow, such as depreciation and amortization.

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life.

Cash Disbursements

The outflow of cash for expenses, such as payments to creditors, operational costs, and investment activities.

Production Budget

An estimate of the number of units that must be produced in a given period to meet the sales and inventory needs, forming part of the master budget of a business.