Suppose the Equilibrium Price of a Tube of Toothpaste Is

question 137

Multiple Choice

Suppose the equilibrium price of a tube of toothpaste is $2,and the government imposes a price floor of $3 per tube.As a result of the price floor,the

• A)demand curve for toothpaste shifts to the left.
• B)supply curve for toothpaste shifts to the right.
• C)quantity demanded of toothpaste decreases,and the quantity of toothpaste that firms want to supply increases.
• D)quantity supplied of toothpaste stays the same.

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Definitions:

Absorption Costing

A financial recording technique that incorporates every manufacturing expense, such as direct materials, direct labor, and all overhead costs (variable and fixed), into the product's cost.

Net Operating Income

The profit a company generates from its core business operations, excluding deductions of interest and tax.

Absorption Costing

An approach in accounting that integrates all costs associated with manufacturing, including direct materials, direct labor, and both variable and fixed overhead, into the product’s price.

Net Operating Income

A company's revenue minus its operating expenses, not including taxes and interest charges, indicating the profitability of its core business activities.