Refer to the Figure Below

question 23

Multiple Choice

Refer to the figure below. Consider the original supply and the original demand curve. If the government imposes a price ceiling of $1.00 on a cup of coffee, then there would be:

• A) a short-term excess demand for coffee, followed by an increase in the equilibrium price.
• B) an excess supply of coffee.
• C) an excess demand for coffee.
• D) a new equilibrium at a price of $1.00 per cup and a quantity of 50 cups per hour.

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Definitions:

Maintenance Cost

Expenses incurred to keep property, equipment, or assets in effective operating condition.

Machine Hour

A measure of production time, representing the time a machine is operated to perform work.

High-low Method

A technique used in managerial accounting to estimate fixed and variable costs based on the highest and lowest levels of activity.

Variable Cost

Costs that change in proportion to the activity or business volume, such as materials and labor directly involved in production.