Figure 38 Alt Text for Figure 3

question 126

Multiple Choice

Figure 3.8 Alt text for Figure 3.8: In figure 3.8, a graph plotting intersecting supply and demand curves represents the market for canvas tote bags.
Long description for Figure 3.8: The x-axis is labelled, Quantity, with the values 0, 10, 20, 50, 75, and 100 marked.The y-axis is labelled, Price, with the values 0, 15, 25, and 50 dollars marked.Curve D is a straight line which slopes down from the top left corner to the bottom right corner.Curve S is a straight line which begins in the bottom left corner and slopes up to the top right corner.The equilibrium of the 2 curves is (50,25) .The point plotted on curve S to the left of equilibrium is (20,15) .The point plotted on curve D to the right of point of equilibrium is (75,15) .The point plotted to the right of equilibrium on curve S is (100,50) .The point plotted to the right of the equilibrium on curve D is (10,50) .
-Refer to Figure 3.8.The figure above represents the market for canvas tote bags.Assume that the price of tote bags is $15.At this price,

• A)the quantity demanded exceeds the quantity supplied of tote bags by 75.The price will eventually rise to $25 where quantity demanded will equal quantity supplied.
• B)the demand exceeds the supply of tote bags by 55.Some consumers will have an incentive to offer to buy tote bags at a higher price.
• C)there is a shortage, equal to 55 tote bags, that will be eliminated when the price rises to $25.
• D)there is a shortage equal to 55 tote bags; the price of tote bags will rise until demand is equal to supply.

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Definitions:

Inventory Turnover

A measure of how many times a company's inventory is sold and replaced over a period, indicating the efficiency of inventory management.

Average Daily Cost

The average daily cost refers to the total cost per day, calculated by dividing the total expenses by the number of days in the period under consideration.

Days' Sales

A financial metric that estimates the average time it takes a company to convert its inventory into sales.

Cost Of Goods Sold

Direct expenses associated with creating the goods a company sells, including both materials and labor.