Which of the Following Is an Example of a Supply

question 28

Multiple Choice

Which of the following is an example of a supply shock?

• A)A surge in consumer optimism prompts increased buying of goods and services.
• B)A surprise tax rebate from the government gives people more money to spend.
• C)A dramatic increase in energy prices increases production costs for firms in the economy.
• D)Government increases spending on education.

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Definitions:

Absorption Costing

An accounting method that includes all manufacturing costs (direct materials, direct labor, and both variable and fixed overhead) in the cost of a product.

Fixed Costs

Costs that remain constant in total regardless of changes in the level of the business activity or production volume.

Product Costs

Costs that are directly associated with the production of goods or services, including direct materials, direct labor, and manufacturing overhead.

Traceable Fixed Expense

Expenses that can be directly linked to a specific department or segment of a business and would disappear if the department or segment was disbanded.