Figure 2.3.1 -The Effect of the September 11 Attacks on the World

question 111

Multiple Choice

Figure 2.3.1
-The effect of the September 11 attacks on the World Trade Center on the market for office space in downtown Manhattan was that both the equilibrium price and the equilibrium quantity fell. What is the most likely explanation for this?

• A) Supply and demand both shifted left, and the magnitude of the demand shift was greater.
• B) Supply and demand both shifted left, and the magnitude of the supply shift was greater.
• C) Supply shifted left, demand shifted right, and the magnitude of the demand shift was greater.
• D) Supply shifted left, demand shifted right, and the magnitude of the supply shift was greater.

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Definitions:

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity levels, making it more useful for management control.

Equipment Depreciation

The allocation of the cost of tangible assets over their useful lives, reflecting the reduction in value due to wear and usage.

Spending Variance

The difference between the budgeted or planned amount of expenses and the actual amount spent.

Supplies Costs

Expenses associated with the purchase of supplies needed for the operation of a business or the production of goods.