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Explain the Reasons Why the AD Curve Slopes Downward

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Explain the reasons why the AD curve slopes downward.


Definitions:

Weighted Average Method

An inventory costing method that assigns an average cost to each item based on the total cost of goods available for sale and the number of items available.

Equivalent Units

A concept used in process costing that converts partially completed units into a number of complete units with regards to work done or costs incurred.

Beginning Inventory

The value of a company's inventory at the start of an accounting period.

Weighted Average Method

An inventory costing method that calculates cost of goods sold and ending inventory based on the weighted average cost of all items available for sale.

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