Figure 81 Depicts the Supply and Demand Schedules of Calculators for for Greece

question 133

Multiple Choice

Figure 8.1 depicts the supply and demand schedules of calculators for Greece, a "small" country that is unable to affect the world price. Greece's supply and demand schedules of calculators are respectively depicted by SG and DG. Assume that Greece imports calculators from either Germany or France. Suppose Germany is the world's low-cost producer who can supply calculators to Greece at $20 per unit, while France can supply calculators at $30 per unit.

Figure 8.1. Effects of a Customs Union

-Referring to Figure 8.1, suppose Greece forms a customs union with France.Greece will import

• A) three calculators at a per-unit price of $30.
• B) three calculators at a per-unit price of $40.
• C) six calculators at a per-unit price of $30.
• D) six calculators at a per-unit price of $40.

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Definitions:

Direct Materials

Materials that are directly used in the production of a product and can be physically and easily traced to it.

Step-Down Method

A method used in cost accounting that allocates support department costs to producing departments in a sequential process, where each department's costs are allocated to other departments based on a predetermined order.

Service Department Costs

Expenses related to departments that do not directly generate revenue but provide essential support services to those that do.

Operating Departments

Divisions within an organization that are directly responsible for producing goods or providing services.