If There Is an Increase in Market Demand in a Competitive

question 204

Multiple Choice

If there is an increase in market demand in a competitive price-taker market, then in the short run

• A) there will be no change in the demand curves faced by individual firms in the market.
• B) the demand curves for firms will shift downward.
• C) the demand curves for firms will become more elastic.
• D) profits will rise.

---

Definitions:

Accounts Receivable

This refers to the money owed to a company by its customers for goods or services that have been delivered but not yet paid for.

Contra Expense Account

An account that is offset against an expense account on the income statement, effectively reducing the total expense reported.

Expense Account

A ledger account that records transactions related to costs incurred by a business in the process of earning revenue.

Adjusting Entry

An accounting record made at the close of an accounting period that assigns income and expenses to the correct period.