-When the Price of a Good Is Below the Equilibrium

question 135

Multiple Choice

-When the price of a good is below the equilibrium price,

• A)suppliers are unable to sell as many units as they want; they will cut output and lower prices.
• B)suppliers can sell as many units as they can produce; they will increase production and raise prices.
• C)the demand curve shifts down to reach an equilibrium price.
• D)the supply curve will shift up to reach an equilibrium price.

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Definitions:

Unrealized Increase

An increase in the value of an asset or investment that has not been sold or exchanged, meaning the gain is not yet reflected in income.

Allowance

In accounting, an estimate for future adjustments to assets, such as bad debt or depreciation.

Market Value

The current price at which an asset or service can be bought or sold in a public marketplace.

Realized Gains

Profit from the sale or exchange of an asset that exceeds its purchase price.