Assume in a Competitive Market That Price Is Initially Above

question 116

Multiple Choice

Assume in a competitive market that price is initially above the equilibrium level. We can predict that price will

• A) decrease, quantity demanded will decrease, and quantity supplied will increase.
• B) decrease and quantity demanded and quantity supplied will both decrease.
• C) decrease, quantity demanded will increase, and quantity supplied will decrease.
• D) increase, quantity demanded will decrease, and quantity supplied will increase.

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Definitions:

Intra-Entity Transactions

Transactions that occur within the same legal entity, often between departments or divisions, which may require elimination during consolidation.

Net Income

The remaining profit for a company after deducting taxes and expenses from the revenue.

Consolidation Entry

A journal entry used in the preparation of consolidated financial statements to eliminate intercompany transactions and balances.

Retained Earnings

The portion of net income that is retained by the company rather than distributed to its shareholders as dividends.