The Price Elasticity of Demand for Soft Drinks Has Been

question 103

Multiple Choice

The price elasticity of demand for soft drinks has been estimated to be 0.55.If the government enacts a major increase in the tax on imported sugar (a major ingredient in soft drink manufacturing) ,how will that affect total expenditures on soft drinks,all other things equal?

• A)Total expenditures will remain unchanged.
• B)Total expenditures will fall.
• C)Total expenditures will rise.
• D)People will buy Pepsi instead of Coke.

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Definitions:

Beginning Inventory

The value of goods available for sale at the start of an accounting period, before any purchases are added or sales are made.

Inventory Costing

The method of accounting that determines the value of a company's inventory, taking into account the costs of acquiring, producing, and other costs associated to bring the inventory to its current condition and location.

Cost of Goods Sold

An accounting term denoting the direct costs attributable to the production of goods sold by a company.

FIFO

"First In, First Out," an inventory valuation method where the goods first added to inventory are the first to be sold.