Assuming the Market Is in Equilibrium in the Graph Shown

question 103

Multiple Choice

Assuming the market is in equilibrium in the graph shown with demand D and supply S₁,total surplus is:

• A) greater than total surplus when market is in equilibrium at D and S₂.
• B) less than total surplus when market is in equilibrium at D and S₂.
• C) the same as total surplus when market is in equilibrium at D and S₂.
• D) zero.

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Definitions:

Machine-Hours

A measurement of production time, representing hours a machine is operated within a given period.

Predetermined Overhead Rate

This rate is used to allocate manufacturing overhead costs to products or job orders based on a set formula, typically involving estimated costs and an allocation base like machine hours or labor hours.

Direct Labor-Hours

The total hours of work attributable directly to the production of goods, often used as a basis for assigning labor costs to units of product.

Predetermined Overhead Rate

A rate used to apply manufacturing overhead to products or job orders, calculated by dividing estimated overhead costs by an allocation base like direct labor hours.