Which of the Following Will Tend to Occur When a Surplus

question 362

Multiple Choice

Which of the following will tend to occur when a surplus exists in a market?

• A) supply will increase and demand will decrease until the surplus disappears.
• B) supply will decrease and demand will increase until the surplus disappears.
• C) the price will tend to rise over time.
• D) the price will tend to decrease over time.

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Definitions:

Overhead Rate

A calculation used to allocate indirect costs to products or services, typically expressed as a percentage of direct labor, materials, or another base.

Activity-based Costing

A costing method that assigns overhead and indirect costs to specific products or activities based on their use of resources.

Allocation Base

A criterion or standard used to distribute costs across multiple cost objects.

Selling and Administrative Expenses

Costs incurred that are not directly tied to the production of goods, such as marketing and office expenses.