Economists Use Elasticity to Measure the Responsiveness of Quantity to a Change

question 115

Multiple Choice

Economists use elasticity to measure the responsiveness of quantity to a change in price rather than the slope of the demand curve because elasticity is

• A) independent of the units of measurement.
• B) dependent on the units of measurement.
• C) easier to calculate.
• D) harder to calculate.
• E) always negative whereas the slope is always positive.

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Definitions:

FIFO Method

A method of inventory valuation where the first items purchased are the first to be sold or used.

Beginning Work

The initial stock of work-in-process inventory at the start of an accounting period.

Conversion Costs

The combination of direct labor and manufacturing overhead costs incurred to convert raw materials into finished goods.

Equivalent Units

A concept in cost accounting used to allocate costs to partially completed goods, measuring them in terms of the amount of completed goods they represent.