The Following Two Graphs Depict the Equilibrium Price of a Pound

question 113

Multiple Choice

The following two graphs depict the equilibrium price of a pound of grapes in California and West Virginia, respectively. Assume the type and quality of the grapes being sold in the two states are identical. Further, assume grape sellers incur zero costs to transport grapes between the two states and there are no other barriers to trade. Use these graphs to answer the following questions.
-Which of the following pairs of prices is consistent with the law of one price?

• A) California price: $0.50; West Virginia price: $0.80
• B) California price: $0.80; West Virginia price: $0.80
• C) California price: $1.20; West Virginia price: $1.20
• D) California price: $1.35; West Virginia price: $1.35
• E) California price: $1.50; West Virginia price: $1.50

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Definitions:

Employee Carelessness

Situations in which employees' lack of attention or disregard for procedures leads to inefficiency or loss for the company.

Overapplied Overhead

A situation where the amount of overhead allocated to products or services exceeds the actual overhead expenses incurred.

Applied Overhead

The process of assigning a portion of estimated overhead cost to specific production jobs or departments based on a predetermined rate.

Actual Overhead

includes the real, as incurred, indirect costs associated with manufacturing a product or providing a service, including utilities and rent.