If the Current Market Price Is Above the Equilibrium Price

question 356

Multiple Choice

If the current market price is above the equilibrium price, then:

• A) the quantity demanded exceeds the quantity supplied.
• B) there will be a shortage.
• C) the quantity supplied will exceed the quantity demanded.
• D) the price will have to increase to establish equilibrium.
• E) demand will shift to the left.

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Definitions:

Closing Process

The closing process involves finalizing accounts at the end of an accounting period, transferring net income and dividend information to retained earnings, and preparing the accounts for the next period.

Owner's Capital

The total value of assets contributed by the owner of a business plus the retained earnings.

Owner's Drawings

Withdrawals of a business's cash or other assets by the owner for personal use.

Expense Accounts

Accounts used to record business expenses, which reduce net income in the profit and loss statement.