Consider a Market That Is in Equilibrium

question 131

Multiple Choice

Consider a market that is in equilibrium.If it experiences both an increase in demand and a decrease in supply,what can be said of the new equilibrium?

• A)The equilibrium price and quantity will both rise.
• B)The equilibrium quantity will definitely rise,while the equilibrium price cannot be predicted.
• C)The equilibrium price will definitely rise,while the equilibrium quantity cannot be predicted.
• D)The equilibrium price and quantity will both fall.

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Definitions:

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board that are becoming the global standard for the preparation of public company financial statements.

GAAP

Generally Accepted Accounting Principles; a collection of commonly-followed accounting rules and standards for financial reporting.

Accounting For Inventories

The process of tracking and managing the goods a company holds for the purpose of sale or production, including valuation and cost determination.

Perpetual Inventory System

An accounting method that records inventory purchases and sales in real time through continuous updates to inventory accounts.