When Prices Are Determined in a Free-Market System

question 41

Multiple Choice

When prices are determined in a free-market system

• A)changes in the economy can be foreseen by officials.
• B)resources are allocated without conscious central coordination.
• C)firms respond to changes in the economy mainly by altering the wage rate.
• D)demand shifts,caused by price changes,coordinate all necessary changes in the economy.
• E)supply shifts,caused by price changes,coordinate all necessary changes in the economy.

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Definitions:

Operating Activities

Business actions that are directly related to the production, sale, and delivery of products or services, which are reflected in the company's income and cash flow statements.

Cash Basis

A bookkeeping approach that registers income and expenses at the time cash is exchanged, rather than when they are accrued.

Direct Method

An accounting practice of allocating support department costs directly to producing departments without consideration for interdepartmental services.

Sales Adjusted

Adjustments made to recorded sales figures for returns, allowances, or discounts to determine the actual net sales amount.