In Preparing and Using Any Budget, It Is Important That

question 10

Multiple Choice

In preparing and using any budget, it is important that managers keep in mind the

• A) assumptions and predictions upon which the budget is based.
• B) present value of future cash flow.
• C) budgeted profit and loss statement.
• D) 'bottom line'.

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Definitions:

Price Elasticity of Demand

The rate at which demand for a product responds to its price being altered.

Short Run

The period in economic theory during which at least one factor of production is considered fixed.

Long Run

A period in which all factors of production can be varied, and no inputs are fixed.

Demand Inelasticity

A situation where the demand for a product does not change significantly with a change in its price.