Suppose That Market Demand for a Good Slopes Downward and Market

question 30

Multiple Choice

Suppose that market demand for a good slopes downward and market supply slopes upward. Equilibrium price is now $10 and 500,000 units of the good are traded at this price. Suppose now that the cost at which each unit of the good is produced falls. What is the likely effect of this change on the market equilibrium?

• A)Excess supply
• B)A fall in price
• C)A shift in demand to the right
• D)An increase in price

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Definitions:

Merchandising Business

A type of business that purchases goods at wholesale prices and sells them at retail prices to earn a profit.

Account Numbers

A unique identifier assigned to each account in a company's chart of accounts, facilitating organization and tracking of financial transactions.

Normal Debit Balance

The expected positive balance in certain accounts of the accounting ledger, such as assets, expenses, and losses.

Sales Tax Payable

A liability account recorded on the balance sheet that represents the amount of sales tax collected from customers and owed to the government.