If You Observe a Market Where Quantity Demanded Doesn't Equal

question 22

Multiple Choice

If you observe a market where quantity demanded doesn't equal quantity supplied, a logical conclusion is that:

• A) the law of demand and supply do not hold in the market.
• B) the fallacy of composition is not operative in the market.
• C) the invisible hand is the only force at work in the market.
• D) social and political forces are likely to exist.

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Definitions:

Period Costs

Expenses that are not directly tied to the production of goods and are instead allocated to the time period in which they are incurred.

Controllable Costs

Expenses that a manager or business unit has the authority to influence or change in the short term.

Product Costs

Costs that are directly associated with the manufacturing of goods including materials, labor, and overhead.

Administrative Costs

Expenses related to the management and general operations of a business, including salaries of senior executives, legal and accounting services.