In Competitive Markets,binding Price Floors and Binding Price Ceilings Lead

question 11

Multiple Choice

In competitive markets,binding price floors and binding price ceilings lead to

• A)a reduction in deadweight loss.
• B)fairer prices for consumers and producers,and therefore are better for society as a whole.
• C)an overall increase in economic surplus,and therefore to market efficiency.
• D)a maximization of economic surplus.
• E)an overall reduction in economic surplus,and therefore to market inefficiency.

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Definitions:

Job Cost Sheet

A document that records the materials, labor, and manufacturing overhead costs assigned to each individual job or project.

Direct Labor

The work of factory employees that can be directly traced to the individual units of product.

Factory Overhead Applied

The allocation of estimated manufacturing overhead costs to individual units of production based on a predetermined rate.

Underapplied

A situation where the actual costs are higher than the costs applied or allocated, typically in manufacturing overhead.