Suppose the Demand for Large (And Therefore High-Gasoline Consumption) Cars

question 113

Multiple Choice

Suppose the demand for large (and therefore high-gasoline consumption) cars decreases sharply during an energy crisis. The most likely market adjustment would be

• A) a sharp rise in the price of large cars in the short run as people rush to purchase these vehicles before producers cut back on manufacturing them.
• B) a moderate increase in short-run prices, followed by a larger long-run price increase as the supply of large cars is depleted.
• C) lower short-run prices, which will lead to an expansion in the number of large cars sold.
• D) a decrease in the price of large cars in the short run, leading to a reduction in output, which will moderate the price decline in the long run.

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Definitions:

Internal Control

Systems and processes implemented by a company to ensure integrity of financial and accounting information, promote accountability, and prevent fraud.

Objectives

The goals or aims that an organization or individual strives to achieve over a certain period.

Implementation

The process of putting a decision or plan into effect; execution of a plan, idea, or policy.

Bank Statement Adjustment

Modifications made to a company's cash account records to reconcile them with the bank statement's transactions and balance.