Use the Following to Answer Question(s): Model of a Competitive

question 44

Multiple Choice

Use the following to answer question(s) : Model of a Competitive Market

-(Exhibit: Model of a Competitive Market) If there are external costs, a tax imposed on sellers will:

• A) decrease the equilibrium quantity.
• B) increase the equilibrium quantity.
• C) have no effect on the equilibrium price.
• D) decrease the equilibrium price.

---

Definitions:

Absorption Costing

The accounting methodology that integrates all costs related to manufacturing, including direct materials, direct labor, and both forms of manufacturing overhead—variable and fixed—into a product's total cost.

Variable Costing

A financial tracking method that considers just the variable operating costs (direct materials, direct labor, and variable manufacturing overhead) in the pricing of merchandise.

Unit Product Cost

The overall expense incurred to manufacture a single item, encompassing direct materials, direct labor, and overhead costs.

Absorption Costing

Absorption costing is an accounting method that includes all of the manufacturing costs (direct materials, direct labor, and overhead) in the cost of a product.