Exhibit 4-3  Supply and Demand Curves Initially the Market Shown

question 129

Multiple Choice

Exhibit 4-3  Supply and demand curves Initially the market shown in Exhibit 4-3 is in equilibrium at P₂, Q₂ (E₂) . Changes in market conditions result in a new equilibrium at P₂, Q₄ (E₄) . This change is stated as a(n) :

• A) increase in supply and an increase in demand.
• B) increase in supply and a decrease in demand.
• C) decrease in demand and a decrease in supply.
• D) increase in demand with supply held constant at S₂.

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Definitions:

Accounts Payable

Accounts payable represents the company's obligation to pay off a short-term debt to its creditors or suppliers.

Conversion

The process of changing an asset or security into another form, such as converting preferred stock into common stock or converting currencies.

Weighted-Average Method

An inventory costing approach that calculates the cost of goods sold and ending inventory based on the average cost of all items.

Equivalent Units

A concept used in process costing that converts partially completed units into a number of fully completed units, to accurately measure output.