In the Specific Factors Model,a 5% Increase in the Price

question 52

Multiple Choice

In the specific factors model,a 5% increase in the price of food accompanied by a 5% increase in the price of cloth will cause wages to ________,the production of cloth to ________,and the production of food to ________.

• A) increase by 5%; remain unchanged; remain unchanged
• B) increase by less then 5%; decrease; increase
• C) increase by more then 5%; increase; remain unchanged
• D) remain constant; increase; increase
• E) remain constant; decrease; decrease

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Definitions:

Work in Process

Inventory that is in the production process but is not yet complete.

Overapplied Overhead

A situation where the overhead costs allocated for products or services exceed the actual overhead costs incurred.

Manufacturing Overhead

Refers to all manufacturing costs excluding the direct costs of labor and materials, such as rent, utilities, and equipment depreciation.

Direct Labor-Hours

The total time worked by employees who are directly involved in the manufacturing process of a product.