Refer to the Information Provided in Figure 5

question 187

Multiple Choice

Refer to the information provided in Figure 5.6 below to answer the question that follows. Figure 5.6
-Refer to Figure 5.6. The market is initially in equilibrium at Point A and supply shifts from S₁ to S₂. Which of the following statements is true?

• A) Price will still serve as a rationing device causing quantity supplied to exceed 12 thousand pizzas.
• B) There is no need for price to serve as a rationing device in this case because the new equilibrium quantity exceeds the original equilibrium quantity.
• C) Price will still serve as a rationing device causing quantity demanded to fall from 12 to 10 thousand pizzas.
• D) The market cannot move to a new equilibrium until there is also a change in demand.

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Definitions:

Net Income

The total profit or loss of a company after all revenues, costs, and expenses have been accounted for, often referred to as the bottom line.

Operating Loss

A financial condition where a company's total operating expenses exceed its total revenues, indicating a negative operating profit.

Income Summary

An account in the ledger that aggregates all income and expense accounts to determine the net income or loss for a period.

Prepaid Rent

This is the amount paid for rent in advance of the rental period to which it relates, recorded as an asset on the balance sheet until the period to which it applies.