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:

Equivalent Units

A concept in cost accounting used to equate units partially completed at the end of a period to units of finished goods.

Materials Cost

The total expense incurred by a company to purchase raw materials used in the production of goods or services.

Process Costing

A costing method used for homogeneous products, where costs are accumulated over a period and assigned to large numbers of identical units.

Cost Per Equivalent Unit

A calculation used in process costing that determines the cost associated with a single unit of output, adjusting for partial completion of units in the production process.