Suppose Shawn Dines at a Restaurant That Serves Clams at a Fixed

question 119

Multiple Choice

Suppose Shawn dines at a restaurant that serves clams at a fixed price and crab legs at a varied,market-determined price.The marginal utility of an order of crab legs is 100 units,and the marginal utility of an order of clams is 50 units.Shawn orders crab legs in one week,but he orders clams in the next week.This means that in the second week _____

• A)the price of crab legs has increased three times more than that of clams.
• B)the price of clams has dropped three times less than that of clams.
• C)the price of clams has dropped four times less than that of clams.
• D)the price of clams has increased four times more than that of clams.
• E)the price of crab legs has increased more than twice that of clams.

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Definitions:

Direct Material Cost

The cost of raw materials and components that are directly used in the production of a product.

Labor Quantity Variance

The difference between the actual hours worked and the standard hours allowed for the work performed, multiplied by the standard hourly wage rate.

Produced

The completed output of goods or services as a result of manufacturing or production processes.

Materials Price Variance

The difference between the actual cost of materials used in production and the expected (or standard) cost of those materials.