If the Demand for a Product Declines, What Happens to the Price

question 165

Multiple Choice

If the demand for a product declines, what happens to the price of the product?

• A) The price stays the same.
• B) The price decreases.
• C) The price increases.
• D) The equilibrium price will be maintained.
• E) The market price will be maintained.

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Definitions:

Raw Material

Fundamental substances that are processed and converted into final products during manufacturing.

Work in Process

Inventory that includes goods that are in the production process but have not yet been completed.

Property, Plant, and Equipment

Long-term tangible assets owned by a business, used in its operations to generate revenue, including buildings, machinery, and equipment.

Overhead Volume Variance

This measures the difference between the budgeted fixed manufacturing overhead and the applied manufacturing overhead, based on the actual production volume.