Refer to the Following Graphs

question 22

Multiple Choice

Refer to the following graphs. In the early 1990s, mounds of newspapers and worthless plastic piled up at recycling centers. As the nation's economy continued to grow, increased demand eliminated the mounds and turned them into shortages. In the mid-1990s, as recycling became more popular, the mounds of recycled materials returned. What graph best depicts these events on the market for recycled materials?

• A) Price remained constant at P0. Quantity demanded first rose, while supply remained constant; quantity supplied then rose, while demand remained constant.
• B) Price remained constant at P0. Supply first shifted from S1 to S0 and then back to S1.
• C) Price remained constant at P0. Demand shifted from D0 to D1 then supply shifted from S0 to S1.
• D) Price remained constant at P0. Demand shifted from D0 to D1 and then back to D0.

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Definitions:

Raw Materials Inventory

The total cost of all the raw materials that are currently held by a company in stock, awaiting to be used in production.

Gallons

A unit of volume used primarily in the United States for measuring liquids.

Standard Costs

Predetermined costs for manufacturing a product, used for budgeting, cost control, and performance evaluation.

Cash Account

An accounting ledger that tracks the money a company spends (cash out) and receives (cash in).