Explain Why the Price of a Good Tends to Rise

question 36

Essay

Explain why the price of a good tends to rise when there is a shortage of the good.Give a hypothetical numerical example to help support your answer.

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Definitions:

Machine Hours

A measure of the total operating time of machinery within a specific period, often used in cost accounting to allocate expenses to units produced.

Overhead Allocation

The process of distributing indirect costs across products, services, or departments within a company.

Department 2

A reference to a specific section, division, or unit within an organization, often used in context to differentiate between various parts of a business operation.

Plantwide Overhead Rate

A single overhead absorption rate calculated for an entire factory, used to allocate manufacturing overhead costs to products.