If Consumption Changes Because of a Change in the Price

question 169

Multiple Choice

If consumption changes because of a change in the price level,then the

• A) economy moves from one point on an AD curve to another point on the same curve.
• B) AD curve shifts.
• C) economy moves from one point on a SRAS curve to another point on the same curve.
• D) SRAS curve shifts.
• E) none of the above

---

Definitions:

Variable Costing

A method of accounting that encompasses just the variable costs associated with manufacturing—such as direct materials, direct labor, and variable manufacturing overhead—as part of the product costs.

Unit Product Cost

An assessment of the total expense incurred to produce a single unit, incorporating direct costs like labor and materials, as well as indirect costs.

Year 1

A term typically used to refer to the first year of operation or the initial year in a specific timeframe.

Variable Costing

An accounting method that only considers variable costs (costs that change with production levels) when calculating the cost of goods sold.