If the Supply of Spring Water Decreases and at the Same

question 59

Multiple Choice

If the supply of spring water decreases and at the same time the demand for spring water increases, the equilibrium price and the equilibrium quantity .

• A) might rise, fall, or stay the same; decreases
• B) falls; increases
• C) rises; might increase, decrease, or stay the same
• D) might rise, fall, or stay the same; increases

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Definitions:

Predetermined Overhead Rate

A rate calculated before the accounting period begins, based on the estimated overhead costs and estimated activity level, used to allocate overhead costs to products or services.

Labor-Hours

A measure of the work performed by employees, typically represented by the number of hours worked.

Variable Manufacturing Overhead

The portion of manufacturing overhead costs that vary with the level of production output.

Fixed Manufacturing Overhead

Consistent costs incurred during the manufacturing process that do not change with the amount of production, like factory rent and salaries of permanent staff.