Which One of the Following Correctly Describes How Price Adjustments

question 56

Multiple Choice

Which one of the following correctly describes how price adjustments eliminate a surplus?

• A) As the price rises, the quantity demanded will increase while the quantity supplied decreases.
• B) As the price falls, the quantity demanded will decrease while the quantity supplied increases.
• C) As the price falls, the quantity demanded will increase while the quantity supplied decreases.
• D) As the price rises, the quantity demanded will decrease while the quantity supplied increases.

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Definitions:

Work in Process Inventory

Goods that are in the process of being manufactured but are not yet complete.

Raw Materials Inventory

The stock of unprocessed materials held by a company, intended for use in production.

Direct Labor

Costs of wages for employees who physically produce products or serve customers directly.

Process Costing System

An accounting system used when products are identical and it's impractical to track individual costs, totaling costs for a period and spreading them evenly across all units produced.