In Response to a Shortage, the Market Price of a Good

question 38

True/False

In response to a shortage, the market price of a good will rise; as the price rises, demand will decrease and supply will increase until equilibrium is reached.

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Definitions:

Actual Costs

The real, total expenses incurred during the production or acquisition of goods and services.

Fixed Overhead

Fixed costs that do not vary with the level of production or sales over a short term, including rental expenses, salaries, and insurance.

Direct Materials Price Variance

This refers to the difference between the actual cost of direct materials and the standard cost that was expected or budgeted for those materials.

Standard Price

The predetermined cost that a company expects to pay for various materials, labor, or overhead used in their products or services.