Suppose the Equilibrium Price of Bread Is $2

question 60

Multiple Choice

Suppose the equilibrium price of bread is $2.00 per loaf. If the government sets a price ceiling of $2.50 per loaf, what will be the result?

• A) The price of wheat will rise and a shortage will be created.
• B) The quantity supplied of wheat will increase.
• C) There will be no change in the quantity of bread demanded or supplied.
• D) There will be a shortage of bread.

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Definitions:

Direct Labor

The wages and other costs for labor directly involved in the production of goods or services, excluding indirect labor costs.

Standard Costs

Predetermined costs for materials, labor, and overhead, against which actual costs are compared.

Cost of Goods Sold

Expenses directly associated with producing goods a company sells, entailing labor and material costs.

Standard Cost Variances

The differences between actual costs and standard costs in manufacturing, divided into categories such as materials, labor, and overhead.