Suppose the Current Equilibrium Price of Pizza Is $5

question 177

Multiple Choice

Suppose the current equilibrium price of pizza is $5.If the government decides the price of pizza cannot rise above $4, the result of this policy would be

• A)a shortage
• B)a surplus
• C)that the market would remain in equilibrium but with a larger quantity bought and sold than at $5
• D)at the $4 price, the quantity sold would be greater than the quantity bought
• E)a shift of demand to the right

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Definitions:

Conversion Costs

The sum of direct labor and manufacturing overhead costs, representing the costs to convert raw materials into finished products.

Direct Materials

The raw materials that are directly traced and integrated into the final product and are a significant part of the manufacturing cost.

Weighted-Average Method

is an inventory costing method that assigns the average cost of goods available for sale to both ending inventory and cost of goods sold.

Conversion Costs

The sum of direct labor and manufacturing overhead costs, representing the costs incurred to convert raw materials into finished products.