If There Is a Sole Producer of a Good,and He

question 114

Multiple Choice

If there is a sole producer of a good,and he faces no threat of competition,it is likely that:

• A) the consumer surplus is greater than in a competitive equilibrium.
• B) the price is set inefficiently high.
• C) the price is set below the competitive equilibrium price.
• D) the market is efficient.

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Definitions:

Manufacturing Overhead

All manufacturing costs other than those accounted for as direct labor and direct materials. Includes indirect costs such as maintenance, utilities, and rent in the production process.

Indirect Materials

Materials used in the production process that cannot be directly linked to specific products, such as lubricants and cleaning supplies.

Direct Materials Cost

The cost of raw materials and components used directly in the manufacturing of a product.

Schedule Of Cost Of Goods Sold

A schedule that contains three elements of product costs—direct materials, direct labor, and manufacturing overhead—and that summarizes the portions of those costs that remain in ending Finished Goods inventory and that are transferred out of Finished Goods into Cost of Goods Sold.