If a Good Only Takes Up a Small Proportion of Your

question 28

Multiple Choice

If a good only takes up a small proportion of your income, the elasticity of demand is likely to be:

• A) relatively elastic.
• B) relatively inelastic.
• C) perfectly elastic.
• D) unit elastic.

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Definitions:

Raw Materials Purchases

The acquisition of the basic materials and components needed for the production of goods.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including materials and labor costs.

Cash Collections

The process of gathering all cash receipts and payments, including those from customers and operational activities, within a particular period.

Merchandise Inventories

Merchandise Inventories consist of goods purchased and held for resale by retail or wholesale businesses, representing a critical component of current assets on the balance sheet.