When Quantity Demanded of a Good Is Less Than the Quantity

question 21

Multiple Choice

When quantity demanded of a good is less than the quantity supplied at the prevailing market price,

• A)the market is in equilibrium
• B)the price of the good tends to rise
• C)the price of the good tends to fall
• D)the demand curve shifts rightward until the surplus is eliminated
• E)the supply curve shifts leftward until the shortage is eliminated

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Definitions:

Income Statement Credit Column

A section on the income statement where credits or revenues are recorded.

Balance Sheet

A document that captures the financial standing of a company at a certain date, outlining its assets, debts, and the equity held by shareholders.

Work Sheet

An informal document used by accountants during the accounting cycle to compile information from the general ledger for the preparation of financial statements and adjusting journal entries.

Closing Entries

Journal entries made at the end of an accounting period to transfer temporary account balances to permanent accounts and prepare the company’s accounts for the next period.