Assume That a Decline in Consumer Demand Occurs in a Purely

question 164

Multiple Choice

Assume that a decline in consumer demand occurs in a purely competitive industry that is initially in long-run equilibrium. We can

• A)predict that the new price will be greater than the original price.
• B)predict that the new price will be less than the original price.
• C)predict that the new price will be the same as the original price.
• D)not compare the original and the new prices without knowing what cost conditions exist in the industry.

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Definitions:

Destroyed Inventory

Goods that have been damaged or rendered unsellable, resulting in a loss for the business.

Retail Inventory Method

An accounting procedure for estimating the value of a store's merchandise by using a percentage of the retail prices.

Cost-to-Retail Ratio

The cost-to-retail ratio is a calculation used in inventory management to estimate the value of ending inventory at retail prices by considering the cost and retail value of goods available for sale.

Estimated Cost

An approximation of the costs associated with a project or production, prior to actual expenditure.