Suppose the Equilibrium Price of Good X Is $25 and the Equilibrium

question 237

Multiple Choice

Suppose the equilibrium price of good X is $25 and the equilibrium quantity is 124 units.If the price of good X is $2:

• A)there will be excess demand for good X.
• B)there will be an excess supply of good X.
• C)the market will clear.
• D)the quantity demanded of good X will be less than 124 units.

Calculate Gross Profit using beginning and ending inventory figures.

Recognize the role of Sales Discounts in calculating Gross Profit.

Understand the accrual accounting principle including revenue recognition and expense recording.

Calculate net sales, cost of goods sold, gross profit, and net income.

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Definitions:

Marginal Propensity

The fraction of an additional unit of income that is spent on consumption rather than being saved.

Consumption Function

The relationship in the economy between consumption and income, other things constant.

Saving Function

The relationship between the level of saving and the level of income, typically showing that saving increases as income increases.

Consumption Function

An economic formula that expresses the relationship between total consumption and gross national income, indicating how much households are likely to spend.