How Does a Lower Price Alleviate the Problem of Excess

question 52

Multiple Choice

How does a lower price alleviate the problem of excess supply?

• A) A lower price increases the number of potential sellers and the number of potential buyers.
• B) A lower price increases the number of potential sellers and decreases the number of potential buyers.
• C) A lower price decreases the number of potential sellers and the number of potential buyers.
• D) A lower price decreases the number of potential sellers and increases the number of potential buyers.

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Definitions:

Stock Dividend

A stock dividend is a dividend payment made to shareholders in the form of additional shares rather than a cash payout, affecting the company's share price and equity structure.

Journal Entry

A journal entry is a recording of a financial transaction in the accounting records of a business, indicating debts and credits to various accounts.

Realizing A Loss

Realizing a loss occurs when an asset is sold for less than its purchase price or book value, officially recognizing the loss in financial records.

Effective Interest Method

An accounting practice used for amortizing a bond premium or discount over the life of the bond in a way that reflects a constant rate of interest.