In the Short Run, When the Average Price Level Rises

question 82

Multiple Choice

In the short run, when the average price level rises due to a shift in AD, total output:

• A) varies unpredictably.
• B) remains constant.
• C) falls.
• D) rises.

Differentiate between adjusted and unadjusted trial balances and their purposes.

Calculate net income or net loss from work sheet columns.

Recognize the necessity of adjusting entries in the journal and ledger and their reflection in financial statements.

Know the components and the preparation of the balance sheet and income statement from work sheet data.

---

Definitions:

Low Initial Price

A pricing strategy where a product or service is offered at a low price to attract customers initially.

Point A to Point B

Represents the process or journey from a starting location, situation, or condition to a designated end or goal, often used figuratively.

Skimming Demand

A pricing strategy where a high price is set to "skim" layers of demand from the market sequentially, usually employed during the introduction of a new product.

Penetration Demand

A market strategy focused on increasing market share for an existing product through penetration pricing, advertisement, and sales promotion.