Which of the Following Events Would Cause a Long-Run Supply

question 22

Multiple Choice

Which of the following events would cause a long-run supply shock?

• A) Refinery capacity in the United States drops permanently.
• B) A new pest destroys much of the alfalfa crop in a given year.
• C) The government spends less on infrastructure maintenance.
• D) Housing prices fall.

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Definitions:

Activity Rate

The cost rate assigned to a specific activity, used in activity-based costing to allocate indirect costs to products or services.

Activity-Based Costing

Activity-based costing is a costing method that assigns overhead and indirect costs to specific activities, providing more accurate product costing.

Overhead Cost

General business expenses that relate to the operation of a company but cannot be directly tied to a specific product or service.

Product Costs

The costs incurred to create a product, encompassing direct materials, direct labor, and manufacturing overhead.