A Price Floor Set Below the Equilibrium Price Will Cause

question 106

Multiple Choice

A price floor set below the equilibrium price will cause which of the following?

• A) an increase in demand
• B) a shortage
• C) a surplus
• D) none of the above

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Definitions:

Weighted Average Method

An inventory costing method that averages out all costs of inventory available for sale during the period and assigns an average cost to each unit sold.

Applied Overhead

An accounting method that allocates estimated overhead costs to specific jobs or production units based on a predetermined rate or formula.

Direct Labor

Wages or costs directly associated with workers who are involved in the production of goods or services.

Continuous Process

A manufacturing or production process that operates without interruption, typically in industries where the product is produced in a flow rather than discrete units.