If Both the Supply of and the Demand for a Good

question 108

Multiple Choice

If both the supply of and the demand for a good decrease simultaneously, and if demand shrinks relatively less than supply, then price will

• A) rise and quantity will fall.
• B) fall and quantity will rise.
• C) be indeterminate and quantity will fall.
• D) stay the same and quantity will fall.

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Definitions:

Mixing Department

A section in a manufacturing process where various inputs are combined to produce a homogenized product.

Supervisory Costs

Expenses related to the oversight and management of employees or production processes.

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity, useful for planning and controlling costs.

Responsibility Reports

Financial reports that measure the performance of departments and managers within an organization, emphasizing accountability.