Suppose There Is an Increase in Supply That Reduces Market

question 68

True/False

Suppose there is an increase in supply that reduces market price. Consumer surplus increases because (1) consumer surplus received by existing buyers increases and (2) new buyers enter the market.

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Definitions:

Cash Consideration

The total amount of cash that is paid or received during a transaction, such as buying an asset or settling a liability.

Net Realisable Value

The estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

Relevant Exchange Rates

Exchange rates that are applied to convert foreign currencies into the reporting currency, crucial for accurately recording transactions in financial statements.

Inventories Write-down

The process of reducing the book value of inventory to its market value when the market value is lower than the cost, resulting in a recognized loss.