The Law of One Price

question 72

Multiple Choice

The law of one price

• A)states that consumers can only buy one good or service at a time.
• B)is a law passed by Congress that prohibits firms from selling a product at two different prices in the same market at the same time.
• C)states that consumers will pay any price for a product that has a perfectly inelastic demand curve.
• D)states that identical products should sell for the same price everywhere.

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Definitions:

Variable Overhead Efficiency Variance

The difference between the actual variable overhead costs incurred and the standard variable overhead costs, based on efficient use of resources.

Labor Rate Variance

The difference between the actual hourly wage paid to workers and the expected (or standard) wage rate, multiplied by the total hours worked.

Variable Overhead Rate Variance

Variable overhead rate variance is the difference between the actual variable overhead costs incurred and the expected (standard) costs, influenced by fluctuations in production activity levels.

Materials Price Variance

The difference between the actual cost of materials and the standard (or expected) cost, indicating how much more or less was spent on materials than was planned.