If the Price of Hand Calculators Falls from $10 to $9

question 120

Multiple Choice

If the price of hand calculators falls from $10 to $9 and, as a result, the quantity demanded increases from 100 to 125, then

• A) demand is price elastic.
• B) demand is price inelastic.
• C) demand is unit elastic with respect to price.
• D) not enough information is given to make a statement about elasticity.

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Definitions:

Factory Overhead

All manufacturing costs that are not directly associated with specific product units, including maintenance, utilities, and equipment depreciation.

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Activity-based Costing

A costing methodology that assigns overhead and indirect costs to specific activities, enhancing costing accuracy.

Haircut Cost

A term often used in finance to describe a reduction applied to the value of an asset for the purpose of calculating capital requirements, or margin loans.