Supply of a Food Item Increases by More Than the Demand

question 5

Multiple Choice

Supply of a food item increases by more than the demand for the food item increases.One thing for certain is that

• A)the price of the food item rises.
• B)income elasticity of demand is less than 0.
• C)the supply curve is price inelastic.
• D)real income falls as a result.
• E)none of the above

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Definitions:

Ending Inventory

The total value of all inventory (goods available for sale) a company holds at the end of an accounting period.

Average Cost Methods

A cost-flow assumption for inventory valuation, where the cost of goods sold and ending inventory are calculated based on the average cost of all units available for sale.

Gross Profit

The difference between sales revenue and the cost of goods sold, before deducting overhead, payroll, taxation, and interest payments.

Ending Inventory

The aggregate value of products on hand for selling when an accounting cycle concludes.