In a Proposal to Increase the Production of Clock Radios

question 24

Multiple Choice

In a proposal to increase the production of clock radios, the sales managers of Rinaldo Electronics reported the total additional cost required to meet the increased production level. The increase in total cost is known as the

• A) opportunity cost.
• B) out-of-pocket cost.
• C) controllable cost.
• D) incremental cost.

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Definitions:

Income Elasticity

A gauge of the extent to which the consumption of a good or service is affected by alterations in the income levels of consumers.

Inferior Good

A type of good for which demand decreases when consumer income rises, contrary to normal goods where demand increases with rising income.

Excise Tax

A specific tax levied on particular goods or services at the point of manufacture or sale, often included in the price of the product.

Supply Curve

A graphical representation of the relationship between the price of a good or service and the quantity of it that producers are willing to supply.