The Supply and Demand Model Is the Workhorse of the Principles

question 9

Multiple Choice

The supply and demand model is the workhorse of the principles of economics because it:

• A) is a useful model by which students can be introduced to economic reasoning.
• B) is a perfect model and can never be improved upon.
• C) does not have to have any empirical testing to back up the results of the model.
• D) follows directly from the inductive approach to economics.

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Definitions:

Fixed Overhead Volume Variance

The difference between the budgeted and actual volume of production, which results in a variance in fixed overhead costs allocated per unit.

Overhead Applied

The portion of manufacturing overhead costs allocated to individual products or job orders based on a predetermined overhead rate.

Products

Goods or commodities that are manufactured or refined for sale.

Variable Overhead Efficiency Variance

The difference between actual hours taken to produce something and the standard hours expected, multiplied by the variable overhead rate.