Refer to the Graph Shown

question 98

Multiple Choice

Refer to the graph shown. If hamburgers are produced by a perfectly competitive industry with a market demand D, in long-run equilibrium the price will be:

• A) $6, and 100 will be sold.
• B) $4, and 200 will be sold.
• C) $5, and 150 will be sold.
• D) $4, and 100 will be sold.

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Definitions:

Lower of Cost

An accounting principle that values inventory at the lower of its historical cost or the current market value.

Net Realizable Value

The estimated selling price in the ordinary course of business, less any costs of completion, disposal, and transportation.

Cost of Goods Sold

The immediate expenses related to manufacturing the products a company sells, which consist of materials and labor.

Inventory

The tangible property held for sale in the normal course of business, or to be used in producing goods or services.