Some Developing Countries Have Used Price Ceilings to Keep Rice

question 7

Multiple Choice

Some developing countries have used price ceilings to keep rice cheap to assist the poor.At the ceiling price:

• A)the quantity demanded will be greater than the quantity supplied and a shortage will result
• B)the quantity demanded will be greater than the quantity supplied and a surplus will result
• C)the quantity demanded will be less than the quantity supplied and a shortage will result
• D)the quantity demanded will be less than the quantity supplied and a surplus will result

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Definitions:

Variable Overhead Rate

The rate at which variable overhead costs are allocated to each unit of production, based on an activity driver.

Fixed Manufacturing Overhead

Costs in the manufacturing process that remain constant regardless of the production volume, including equipment depreciation and building lease expenses.

Direct Labor-Hours

The total hours worked by employees who are directly involved in the production of goods or services.

Direct Labor

The labor costs of employees who are directly involved in the production of goods, an element of production costs.