Figure 9-16

question 2

Multiple Choice

Figure 9-16.The figure below illustrates a tariff.On the graph,Q represents quantity and P represents price.
-Refer to Figure 9-16.The tariff

• A)decreases producer surplus by the area C,decreases consumer surplus by the area C + D + E,and decreases total surplus by the area D + F.
• B)increases producer surplus by the area C,decreases consumer surplus by the area C + D + E + F,and decreases total surplus by the area D + F.
• C)creates government revenue represented by the area B + E and decreases total surplus by the area D + E + F.
• D)increases producer surplus by the area C + G and creates government revenue represented by the area D + E + F.

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Definitions:

Standard Quantity Allowed

The quantity of materials or resources authorized for use in the production of a certain level of output under standard operating conditions.

Finished Goods Inventory

The stock of completed products that are ready to be sold but have not yet been sold to customers.

Standard Costing System

A method of cost accounting that involves assigning expected costs to production and then analyzing any variances between those expected costs and actual costs incurred.

Work in Process Inventory

Goods that are in the process of being manufactured but are not yet complete.