If a Seller Lowers the Price of a Product When

question 192

Multiple Choice

If a seller lowers the price of a product when demand is price inelastic, the seller can expect revenues to

• A) rise.
• B) fall.
• C) stay the same.
• D) either rise or fall, but it is impossible to determine which.

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Definitions:

Variable Manufacturing Overhead Cost Incurred

The variable expenses directly related to the manufacturing process, such as materials and labor, that change with production levels.

Total Variable Overhead Variance

The difference between the actual variable overhead costs incurred and the standard variable overhead costs expected for the actual production level.

Labour Rate Variance

The difference between the actual labor costs and the standard (expected) labor costs for a given period.

Actual Direct Labour Rate

The real wage rate paid for the hours that direct laborers work, differing from initially estimated or standard rates.