With a Downward Sloping Demand Curve and an Upward Sloping

question 217

Multiple Choice

With a downward sloping demand curve and an upward sloping supply curve for a product, an increase in incomes will:

• A)increase equilibrium price and quantity if the product is a normal good.
• B)decrease equilibrium price and quantity if the product is a normal good.
• C)have no effect on equilibrium price and quantity.
• D)reduce the quantity demanded, but not shift the demand curve.

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Definitions:

Standard Price

A pre-determined cost allocated to a single unit of product or service, used for budgeting and performance evaluation.

Ideal Standards

Standards that assume peak efficiency at all times.

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the expected (standard) quantity, multiplied by the standard cost of those materials.

National Distribution

The process of distributing products or goods across an entire country, often involving multiple transportation and logistics strategies.