Consider a Market That Is in Equilibrium

question 12

Multiple Choice

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

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

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Definitions:

Direct Labor-Hours

The total hours worked by employees directly involved in the manufacturing process.

Standard Cost System

An accounting method that uses cost estimates to predict the cost of producing or acquiring goods.

Predetermined Overhead Rate

A rate calculated before a period begins, used to allocate manufacturing overhead costs to products based on a related activity.

Electrical Motor

A device that converts electrical energy into mechanical energy, commonly used in a wide range of applications from household appliances to industrial machinery.