One of the Implications of Price Elasticity of Technology Products

question 2

Multiple Choice

One of the implications of price elasticity of technology products is that:

• A) the cost of a semiconductor chip fabrication plant doubles every four years.
• B) the magnetic disk areal storage density doubles annually.
• C) customers not only buy more products as they become cheaper, but whole new markets employing new technology open up.
• D) the value of chips in semiconductor-based devices appreciates every six months.
• E) firms stock up on tech products and sell them once their prices increase.

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Definitions:

Activity-Based Costing

A method of accounting that identifies the activities in an organization and assigns the cost of each activity with resources to all products and services according to the actual consumption.

Manufacturing Overhead

Costs associated with the production process that are not directly tied to the product, including factory rent, utilities, and equipment depreciation.

Direct Labor-Hours

A measure of the total hours worked directly on the production of goods or services by employees.

Predetermined Overhead Rate

The predetermined overhead rate is a rate that is calculated before a period begins, used to allocate estimated overhead costs to cost objects based on a chosen activity base.