(Figure: Determining Surplus and Loss) Consider the Graph

question 31

Multiple Choice

(Figure: Determining Surplus and Loss) Consider the graph. If the price is lowered from $8 to $5, a surplus of

• A) $60 is transferred from producers to consumers.
• B) $60 is transferred from consumers to producers.
• C) $140 is transferred from producers to consumers.
• D) $140 is transferred from consumers to producers.

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Definitions:

Favorable

A term used in budgeting and accounting to describe a financial result or variance that is better than expected or budgeted.

Flexible Budget

A budget that adjusts or scales according to changes in the volume of activity, revenue, or other factors.

Sales Variance

The difference between actual sales and budgeted or forecasted sales, analyzed to understand revenue performance.

Flexible Budget Sales

Sales projections within a flexible budget that adjust based on actual levels of activity, rather than being fixed.