When Supply Is More Elastic Than Demand

question 171

Multiple Choice

When supply is more elastic than demand,

• A) producers carry the majority of the tax burden.
• B) consumers carry the majority of the tax burden.
• C) producers and consumers carry an equal amount of the tax burden.
• D) producers carry all of the tax burden.

---

Definitions:

Weighted-Average Method

A method of inventory valuation that assigns a cost to inventory on the basis of the average cost of all similar items in the inventory.

Direct Materials

Raw materials that are directly traceable to the manufacturing of a specific product and included in its cost.

Conversion Costs

Expenditures associated with transforming raw materials into final products, often comprising direct labor costs and indirect manufacturing expenses.

Equivalent Units

A concept used in process costing that converts partially completed units into an equivalent number of fully completed units to accurately measure inventory and cost of goods sold.