If a Minimum Price Is Set Above the Equilibrium Price

question 3

Multiple Choice

If a minimum price is set above the equilibrium price:

• A) quantity demanded will be greater than quantity supplied
• B) quantity supplied will be less than quantity demanded
• C) quantity demanded will be less than quantity supplied
• D) quantity demanded will equal quantity supplied

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Definitions:

Direct Materials Cost Variance

A measure that evaluates the difference between the actual costs of direct materials used in production and the standard costs.

Direct Materials Price Variance

Direct materials price variance is the difference between the actual cost of direct materials used in production and the standard cost, indicating how much more or less was spent than expected.

Direct Materials Quantity Variance

The difference between the actual quantity of materials used in production and the standard quantity expected, multiplied by the standard cost per unit.

Flexible Budget Sales

Projected sales figures that can adjust based on changes in production levels or market conditions.