The Gippsland Region in Victoria Produces a Lot of Potatoes

question 141

Multiple Choice

The Gippsland region in Victoria produces a lot of potatoes from many potato farms.Suppose the sole input into the production of potatoes is the labour required to harvest.Which of the following statements regarding market structure do you think is most likely the case?

• A)the market for potatoes is competitive and the supply of potato pickers is a monopoly
• B)the market for potatoes is competitive and the market for potato pickers is competitive
• C)the market for potatoes is a monopoly and the market for potato pickers is competitive
• D)the market for potatoes is a monopoly and the supply of potato pickers is a monopoly

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Definitions:

Direct Labor

The cost of wage-earning employees who are directly involved in the production of goods or services, such as assembly line workers.

Direct Labor Rate Variance

The difference between the actual cost of direct labor and the standard cost, demonstrating how actual labor costs differ from budgeted amounts.

Materials Price Variance

The difference between the actual cost of materials used in production and the standard cost, multiplied by the quantity of materials used.

Fixed Manufacturing Overhead

The portion of manufacturing overhead costs that do not vary with production volume, such as rent and salaries of supervisors.