Which of the Following Will Occur in Response to an Unexpected

question 94

Multiple Choice

Which of the following will occur in response to an unexpected increase in demand in a constant-cost,competitive industry?

• A)Resources will move out of the industry.
• B)The output of the industry will remain constant.
• C)The output will increase with input prices remaining unchanged
• D)The existing firms will not be able to expand output sufficiently without incurring huge costs.

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Definitions:

Work In Process

Work in process are goods in various stages of production within a factory, not yet completed to become finished goods.

First-In, First-Out

An inventory valuation method where goods first purchased or produced are the first to be sold or used, assuming the earliest inventory costs flow out first.

Conversion Costs

Conversion costs are manufacturing or production costs that include direct labor and overhead expenses, necessary to convert raw materials into finished goods.

Equivalent Units

Equivalent units refer to a conversion measure used in cost accounting to express the amount of work done by manufacturers on units that are only partially completed at the end of an accounting period.