-The Table Above Gives the Demand and Supply Schedules for Fireworks

question 87

Multiple Choice

-The table above gives the demand and supply schedules for fireworks on the island of Big Bang. In the past, because many deaths have resulted from accidents involving fireworks, the government has banned fireworks and is enforcing the ban. A $6 a firework penalty on sellers of fireworks and no penalty on buyers will reduce the number of fireworks bought to _______ a week and increase the price paid by buyers to _______ a firework.

• A) 40; $13
• B) 80; $11
• C) 0; an unknown amount
• D) 140; $8

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Definitions:

Equivalent Units

A concept used in process costing that represents the portion of finished units that would have been completed given the work done on incomplete units.

First-In, First-Out

An inventory valuation method that assumes goods or materials purchased first are sold or used first.

Conversion Costs

Costs incurred to convert raw materials into finished products, including direct labor costs and manufacturing overhead.

FIFO Method

An inventory valuation method that assumes the first items placed into inventory are the first sold; stands for "First In, First Out."