Assume That the Demand Curve for MP3 Players Shifts to the Right

question 170

Multiple Choice

Assume that the demand curve for MP3 players shifts to the right and the supply curve for MP3 players shift to the left, but the supply curve shifts less than the demand curve.As a result

• A)both the equilibrium price and quantity of MP3 players will decrease.
• B)both the equilibrium price and quantity of MP3 players will increase.
• C)the equilibrium price of MP3 players may increase or decrease; the equilibrium quantity will decrease.
• D)the equilibrium price of MP3 players will increase; the equilibrium quantity will decrease.

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Definitions:

Materials Price Variance

The difference between the actual cost of raw materials and the standard cost expected to be paid, reflecting changes in price.

Raw Materials Price Variance

A measure of the difference between the actual cost of raw materials and the expected (standard) cost.

Labor Efficiency Variance

The difference between the budgeted and actual hours worked, multiplied by the standard labor rate, indicating efficiency in labor usage.

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the expected (standard) variable overhead rate multiplied by the actual activity level.