Which One of the Following Correctly Describes How Price Adjustment

question 129

Multiple Choice

Which one of the following correctly describes how price adjustment eliminates a surplus?

• A)As the price falls, the quantity demanded decreases and the quantity supplied increases.
• B)As the price falls, the demand for substitutes decreases, which eliminates the surplus.
• C)As the price rises, the quantity demanded decreases and the quantity supplied increases.
• D)As the price falls, the quantity demanded increases and the quantity supplied decreases.
• E)As the price rises, the quantity demanded increases and the quantity supplied decreases.

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Definitions:

Upstream Division

A segment within a company that focuses on the initial stages of production or the supply chain, such as raw materials acquisition.

Downstream Division

The section of a company involved with the processing, marketing, and sale of products derived from raw materials.

Profit Centers

Segments within a business that are directly responsible for generating profits through their activities and performance.

Divisional Profit

The earnings generated by a distinct operational unit or division within a larger organization, often assessed to evaluate the unit's financial performance.