Producer Surplus Definitely Exists When the

question 315

Multiple Choice

Producer surplus definitely exists when the

• A) price exceeds marginal benefit.
• B) price exceeds marginal cost.
• C) marginal cost exceeds the price.
• D) marginal benefit exceeds the price.
• E) marginal benefit exceeds the marginal cost.

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Definitions:

Favorable Variance

The difference between actual results and expected (budgeted) results that indicates more efficient or cost-effective performance.

Actual Cost

The actual expenses incurred in acquiring an asset or delivering a service, including all relevant expenditures without estimation.

Budgeted Cost

The estimated or planned amount of money allocated for a particular purpose or period of time.

Direct Materials Cost Variance

A measure that evaluates the difference between the actual costs of direct materials used in production and the standard costs.