Figure: Supply Shift in the Figure, the Supply Curve

question 198

Multiple Choice

Figure: Supply Shift In the figure, the supply curve shifted from S₀ to S₁. To describe this movement, we would say that:

• A) demand decreased, which caused a decrease in supply.
• B) supply decreased, which caused a decrease in quantity demanded.
• C) supply decreased, which caused a decrease in demand.
• D) supply increased, which caused a decrease in quantity demanded.

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Definitions:

Direct Materials

Raw materials that are directly traceable to the manufacturing of a product and constitute an integral part of the finished product.

Manufacturing Overhead

Costs associated with the production process that are not directly traceable to a specific product, such as utilities and factory maintenance.

Cost of Goods Sold

The costs incurred directly from manufacturing the goods a company sells.

Overapplied

A situation where the allocated overhead costs in accounting exceed the actual overhead costs incurred.