When a Good Is Scarce

question 59

Multiple Choice

When a good is scarce,

• A) this indicates that producers are withholding output so they can raise the price of the good.
• B) some method must be used to allocate the good among users.
• C) price is one way to ration the good.
• D) both b and c are correct.
• E) all of the above are correct.

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Definitions:

Absorption Costing

An accounting method that includes all direct and indirect manufacturing costs in the cost of a product.

Net Income

Net income is the total profit of a company after all expenses, taxes, and costs have been subtracted from total revenue.

Variable Costing

An accounting method that includes only variable production costs (materials, labor, and variable overhead) in product cost calculations, excluding fixed overhead.

Absorption Costing

A costing method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a product.