What Is the Effect on the Price and Quantity of Wooden

question 245

Multiple Choice

What is the effect on the price and quantity of wooden desks of a rise in the price of wood?

• A) The equilibrium quantity of wooden desks increases and the equilibrium price falls.
• B) The equilibrium quantity of wooden desks increases and the equilibrium price rises.
• C) The equilibrium quantity of wooden desks decreases and the equilibrium price falls.
• D) The equilibrium quantity of wooden desks decreases and the equilibrium price rises.

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Definitions:

FIFO

An inventory valuation method that assumes the first items placed in inventory are the first sold (First In, First Out).

Cost of Goods Sold

Specific costs directly linked to the creation of products sold by a business.