Under Competitive Conditions, Market Prices

question 144

Multiple Choice

Under competitive conditions, market prices

• A) generally convey little information about the value and cost of goods.
• B) do not usually have much of an effect on the decisions of individuals.
• C) are incapable of coordinating the actions of buyers and sellers.
• D) generally bring the self-interest of individuals into harmony with the general welfare.

---

Definitions:

Direct Material

Raw materials that can be directly traced to the production of a specific product and are a significant component of its cost.

Variable Overhead

Costs of overhead that vary directly with the level of production, such as utilities or indirect materials.

Power Cost

The expense associated with the consumption of electrical energy by a company's operations.

Efficiency Variances

These variances measure the difference between the actual input used to produce a good or service and the standard input expected to be used, showing how efficiently resources are utilized.