If the Demand for Jelly Decreases, and the Price of Grapes

question 62

Multiple Choice

If the demand for jelly decreases, and the price of grapes (used to make jelly) rises

• A) the equilibrium price of jelly rises and the equilibrium quantity of jelly might rise or fall.
• B) the equilibrium price of jelly falls and the equilibrium quantity of jelly might rise or fall.
• C) the equilibrium price of jelly might rise or fall, and the equilibrium quantity of jelly falls.
• D) the equilibrium price of jelly might rise or fall, and the equilibrium quantity of jelly rises.

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Definitions:

Weighted-Average Method

An inventory valuation method where costs of goods sold and ending inventory values are based on the average cost of all items available for sale.

Assembly Department

A division within a manufacturing facility where parts are put together to make a final product.

Cost Reconciliation Report

A document summarizing the costs in a production process, comparing expected costs to actual costs, and explaining differences or variances.

Weighted-Average Method

A cost accounting method used to calculate the cost per unit of inventory by considering the weighted average of the costs of the items available for sale.