In the Case of a Price Floor

question 22

Multiple Choice

In the case of a price floor,

• A)there will be a shortage.
• B)there is no need for government to buy any excess.
• C)government must require producers to increase production to meet demand.
• D)there is a redistribution of income from consumers to producers.
• E)supply decreases.

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Definitions:

Period Expense

Costs that are not directly related to production and are charged as expenses in the period they occur.

Predetermined Overhead Rate

A rate calculated by dividing estimated overhead costs by an estimated activity base, used to allocate overhead costs to products or services.

Fixed Manufacturing Overhead

Costs that do not vary with the level of production or sales, such as rent, salaries, and equipment depreciation within a manufacturing plant.

Manufacturing Overhead

All costs tied to production that are not direct materials or direct labor.