If a Market Reflects a Shortage and Prices Are Allowed

question 130

Multiple Choice

If a market reflects a shortage and prices are allowed to move:

• A) supply will increase.
• B) demand will decrease.
• C) price will decrease.
• D) price will increase.

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Definitions:

Debit

An accounting entry that increases an asset or expense or decreases a liability, equity, or revenue.

Credit

A financial term defining the ability to obtain goods or services before payment, based on the trust that payment will be made in the future.

Underapplied Overhead

A situation where the applied manufacturing overhead is less than the actual manufacturing overhead costs incurred.

Direct Materials

Raw materials that are directly traceable to the production of specific goods or products.