If the Price of a Good Increases,________

question 170

Multiple Choice

If the price of a good increases,________.

• A) the budget constraint shifts to the right
• B) the budget constraint shifts to the left
• C) consumer surplus increases
• D) consumer surplus decreases

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Definitions:

Direct Materials Purchases Variance

The difference between the actual cost of direct materials purchased and the expected (or standard) cost, used for budgeting and cost control purposes.

Standard Costs

Predetermined or budgeted costs for materials, labor, and overhead used for cost control and financial planning.

Materials Quantity Variance

The variance between the real amount of materials consumed in the manufacturing process and the anticipated standard amount.

Direct Materials Purchases Variance

The difference between the actual cost of direct materials purchased and the expected, or budgeted, cost.