Suppose That Both the Equilibrium Price and the Equilibrium Quantity

question 125

Multiple Choice

Suppose that both the equilibrium price and the equilibrium quantity of ketchup fall.The most consistent explanation for these observations is

• A) a decrease in the demand for ketchup with no change in supply.
• B) an increase in the demand for ketchup with no change in supply.
• C) an increase in the demand for ketchup and a decrease in the supply of ketchup.
• D) an increase in the supply of ketchup with no change in demand.
• E) a decrease in the supply of ketchup with no change in demand.

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Definitions:

Departmental Overhead Rate

The rate used to allocate overhead costs to individual departments based on certain criteria or activities.

Cost Assignment

The process of identifying, aggregating, and assigning costs to cost objects, such as products, services, or departments.

Plantwide Overhead Rate

A single overhead rate calculated by dividing total factory overhead by the total amount of a chosen allocation base, applied uniformly across all production.

Activity-based Costing (ABC)

A costing method that assigns overhead and indirect costs to related products and services based on their usage.