Which of the Following Is NOT an Effect of a Price

question 6

Multiple Choice

Which of the following is NOT an effect of a price ceiling?

• A) surpluses
• B) misallocation of resources
• C) loss of gains from trade
• D) wasteful lineups

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Definitions:

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity.

Fixed Costs

Costs that do not vary with changes in the volume of production or sales, such as rent, salaries, and insurance.

Activity Level

A measure in cost accounting that identifies the extent to which cost drivers affect the cost of producing goods or services.

Materials Price Variance

The difference between the actual cost of direct materials and the expected cost, based on standard price and actual quantity purchased.