Holding All Other Forces Constant,when the Price of Gasoline Rises,the

question 228

Multiple Choice

Holding all other forces constant,when the price of gasoline rises,the number of gallons of gasoline demanded would fall substantially over a ten-year period because

• A)buyers tend to be much less sensitive to a change in price when given more time to react.
• B)buyers tend to be much more sensitive to a change in price when given more time to react.
• C)buyers will have substantially more real income over a ten-year period.
• D)the quantity supplied of gasoline increases very little in response to an increase in the price of gasoline.

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Definitions:

Variable Costing

Variable costing is an accounting method that only considers variable costs, which change with production levels, in the cost of goods sold and excludes fixed manufacturing overhead.

Income Statement

A financial statement that shows a company's revenues, expenses, and profits over a period of time.

Absorption Costing

An approach to pricing that involves including every manufacturing expense - like direct materials, direct labor, as well as fixed and variable overheads - in calculating the cost of a product.

Income Statement

A financial statement that reports a company’s financial performance over a specific accounting period.