Use the Following Diagram

question 50

Multiple Choice

Use the following diagram. Suppose an advance in technology causes supply to increase from S₁ to S₂. At price P₁ there is:

• A) an excess demand of Q₄ - Q₃.
• B) an excess demand of Q₄ - Q₂.
• C) an excess supply of Q₄ - Q₃.
• D) an excess supply of Q₄ - Q₂.

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Definitions:

Transferred Out

In manufacturing and accounting, refers to goods or materials that have been moved from one process or department to another in the production process.

Weighted-Average Method

A cost-flow assumption used in inventory valuation and costing, calculating the cost of goods sold and ending inventory based on a weighted average of costs.

Equivalent Unit

A concept used in process costing that represents the amount of work done on incomplete units, expressed in terms of fully completed units.

Weighted-Average Method

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