The Figure Given Below Shows the Demand and Supply Curves

question 82

Multiple Choice

The figure given below shows the demand and supply curves in the market for coffee. S₁ and D₁ are the original demand and supply curves.Figure 3.5
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-When a freely functioning market is in disequilibrium:

• A)the government must set a price ceiling.
• B)the government must set a price floor.
• C)the price and quantities demanded and/or supplied change until equilibrium is established.
• D)it will continue to remain in disequilibrium.
• E)it will reach equilibrium at a very high/low price.

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Definitions:

Overhead Rate

A measure used to allocate the costs of indirect expenses to specific cost objects based on a certain base, such as labor hours or machine hours.

Plantwide Overhead Rate

A single overhead absorption rate used throughout an entire plant or company to allocate indirect costs to cost objects.

Direct Labor Hours

The total time workers spend on creating a product or service, often used as an allocation base in cost accounting.

Overhead Assigned

The process of allocating indirect costs, such as utilities or rent, to specific cost objects like products or departments.