Suppose the Number of Buyers in a Market Decreases and a Technological

question 104

Multiple Choice

Suppose the number of buyers in a market decreases and a technological advancement occurs also.What would we expect to happen in the market?

• A)Equilibrium price would decrease,but the impact on equilibrium quantity would be ambiguous.
• B)Equilibrium quantity would increase,but the impact on equilibrium price would be ambiguous.
• C)Equilibrium quantity would decrease,but the impact on equilibrium price would be ambiguous.
• D)None of the above is correct.

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Definitions:

Variable Manuf. Overhead

Variable manufacturing overhead refers to the indirect costs that change with the level of production, such as utilities for the manufacturing plant.

Labour Efficiency Variance

The difference between the actual hours worked and the standard hours expected to produce a certain number of units, valued at the standard labor rate.

Direct Labour Cost

The wages and salaries paid to workers who are directly involved in the production of goods or services.

Direct Material Costs

The costs of raw materials that can be directly traced to the production of a specific product.