The Figure Given Below Shows the Demand and Supply Curves

question 14

Multiple Choice

The figure given below shows the demand and supply curves in the market for coffee. S₁ and D₁ are the original demand and supply curves.Figure 3.5
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-When will a shortage occur in a market?

• A)When the actual price is lower than the equilibrium price
• B)When quantity supplied is greater than the equilibrium quantity
• C)When the quantity that consumers are willing and able to purchase decreases
• D)When the quantity available at zero price is insufficient to meet demand
• E)When a price floor is set in the market

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Definitions:

Gross Method

A method of recording purchases at the gross invoice amount before any trade discounts are subtracted.

Hedging

A strategy used in financial management to offset potential losses or gains that may be incurred by a companion investment, thereby reducing the risk of adverse price movements.

IFRS

International Financial Reporting Standards, a set of global accounting guidelines providing a common language for business affairs so that company accounts are understandable and comparable across international boundaries.

Gross Method

An accounting approach for recording purchases or sales of inventory where discounts are not taken into account until they are actually realized.