Refer to the Information Provided in Figure 4

question 122

Multiple Choice

Refer to the information provided in Figure 4.3 below to answer the question(s) that follow. Figure 4.3
-Refer to Figure 4.3. If the government will not allow retailers to charge less than $0.50 for a pencil, which of the following will happen?

• A) Demand must eventually increase so that the market will come into equilibrium at a price of $0.50.
• B) Supply must eventually decrease so that the market will come into equilibrium at a price of $0.50.
• C) Retailers will have an excess supply of pencils.
• D) The market will be in equilibrium at a price of $0.50.

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Definitions:

Machine-Hour

A unit of measure representing an hour of operation of a machine, used in calculating manufacturing costs and overhead rates.

Fixed Manufacturing Overhead

Costs associated with the production process that do not vary with the volume of production, such as factory rent.

Variable Overhead Efficiency Variance

The difference between the actual variable overheads incurred and the standard cost of those overheads for the actual production level.

Electrical Motor

A device that converts electrical energy into mechanical energy, used in a multitude of applications from household appliances to industrial machinery.