The Market for Beef Is in Long-Run Equilibrium at $3

question 17

Multiple Choice

The market for beef is in long-run equilibrium at $3.25 per pound.The announcement that mad cow disease has been discovered in the United States reduces the demand for beef sharply,and the price falls to $2.00 per pound.If the long-run supply curve is horizontal,when the long-run equilibrium is reestablished,the price will be:

• A)$3.25 per pound.
• B)$2.00 per pound.
• C)greater than $2.00 per pound but less than $3.25 per pound.
• D)More information is needed to answer this question.

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Definitions:

Activity Overhead Rates

Rates used to allocate overhead costs to products or services based on specific activities driving the overhead expenses.

Cost Pools

Groupings of individual costs based on their shared function or similarity, used in the allocation of costs to products or services.

ABC Systems

Activity-Based Costing systems, which allocate overhead costs based on the activities that drive those costs, providing more accurate cost information.

Cost Drivers

Factors that cause the cost of an activity or process to change, used in strategic management to control and reduce costs.