If the Market Price Is Higher Than the Equilibrium Price

question 21

Multiple Choice

If the market price is higher than the equilibrium price a:

• A) shortage exists and the equilibrium price will rise until it equals the market price and the shortage is eliminated.
• B) surplus exists and the market price will fall until it equals the equilibrium price and the surplus is eliminated.
• C) surplus exists and the equilibrium price will rise until it equals the market price and the surplus is eliminated.
• D) shortage exists and the market price will fall until it equals the equilibrium price and the shortage is eliminated.

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Definitions:

Overstate Liabilities

Refers to the act of reporting liabilities on the financial statements at amounts higher than what is true or accurate.

Internal Controls

Mechanisms, policies, and procedures implemented by a company to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud.

Safeguarding Assets

Refers to the actions and policies put in place by an organization to protect its assets from theft, damage, or misuse.

Voucher System

A method of accounting in which documents are used to authorize and record transactions.