Suppose Iceberg Lettuce Has an Income Elasticity of Demand of 0.35.A

question 70

Multiple Choice

Suppose iceberg lettuce has an income elasticity of demand of 0.35.A 10 percent increase in income causes the quantity demanded of iceberg lettuce to _______________ by ______________ percent.

• A)rise;3.5
• B)rise;28.57
• C)fall;28.57
• D)fall;3.5

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Definitions:

Machine-Hours

A measurement of the amount of time machines are operating, used as a basis for allocating machine-related costs to products or services.

Fixed Manufacturing Overhead

Costs associated with manufacturing that do not vary with the level of production, such as salaries of managers, rent of the factory, and depreciation of manufacturing equipment.

Budget Variance

The difference between budgeted figures for revenue or spending and the actual amounts incurred.

Machine-Hours

A measure of production time, calculated by the number of hours machines are operating as part of the manufacturing process.