Refer to the Following Graph

question 56

Multiple Choice

Refer to the following graph. Demand and supply are initially D and S1 respectively.Which of the following best describes the effect of a $0.50 per pound tariff on Danish hams imported into the United States?

• A)Supply shifts from S1 to S2; quantity sold rises to 100 thousand pounds and price paid by consumers declines to $1.75 a pound
• B)Neither supply nor demand shift, but price paid by consumers declines to $1.50 a pound while quantity sold remains at 80 thousand pounds
• C)Supply shifts from S1 to S0; quantity sold declines to 60 thousand pounds and price paid by consumers rises to $2.50 a pound
• D)Supply shifts from S1 to S0; quantity sold declines to 60 thousand pounds and price paid by consumers rises to $2.25 a pound

---

Definitions:

Job-Order Costing

An accounting methodology used to assign costs to specific jobs or batches, enabling the calculation of profitability per job.

Machine-Hours

A measure of production time, calculated by multiplying the number of machines by the hours they are in operation.

Predetermined Overhead Rate

The rate calculated prior to the accounting period that is used to apply overhead costs to products or job orders, based on estimated costs and activity levels.

Machine-Hours

A measure of production time or activity, where one machine-hour represents the operation of a machine for one hour.