Which One of the Following Factors Is Not an Explanation

question 229

Multiple Choice

Which one of the following factors is not an explanation of the positive relationship between market price and quantity supplied?

• A) The law of diminishing returns makes it more costly for firms to expand output quickly.
• B) As price increases, some less efficient firms will enter the market.
• C) For most firms, unit costs decrease as output increases in the long run.
• D) As all firms in an industry hire more factors of production, the prices paid for them often increase.

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Definitions:

Customizing

refers to tailoring products or services to meet specific customer needs or preferences.

Manufacturing Overhead

The expenses linked to manufacturing not including direct labor and materials.

Predetermined Overhead Rates

Overhead rates calculated before a period starts by dividing estimated overhead costs by an expected allocation base.

Machine-Hours

A measure of production output or activity based on the number of hours machines are operating in the manufacturing process.