How Have the Recent Increases in the Price of Gasoline

question 105

Multiple Choice

How have the recent increases in the price of gasoline affected the market for hybrid cars?

• A) The demand has increased, increasing the equilibrium price and quantity of hybrid cars.
• B) The supply has increased, decreasing the equilibrium price and increasing the equilibrium quantity of hybrid cars.
• C) The demand has increased, decreasing the equilibrium price and increasing the equilibrium quantity of hybrid cars.
• D) The demand and supply of hybrid cars have both increased in response to changing gas prices, so the equilibrium quantity has definitely decreased, but the effect on price cannot be determined without more information.

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Definitions:

Direct Labor

The wages and other costs for labor directly involved in the production of goods or provision of services.

Weighted Average Method

An inventory valuation method where costs of goods sold and ending inventory are determined by taking the weighted average of all units available for sale during the period.

Work in Process Inventory

Inventory that includes goods that are in the production process but are not yet complete.

Equivalent Units

A concept used in process costing that converts partially completed units into a number of fully equivalent units.