Use the Following to Answer Questions

question 78

Multiple Choice

Use the following to answer questions:
Figure: Water Market
-(Figure: Water Market) Refer to the figure. If a price floor in the diagram gets set at $8 a gallon, how big is the shortage or surplus?

• A) 60,000 gallons in surplus
• B) 120,000 gallons in surplus
• C) 60,000 gallons in shortage
• D) 12,000 gallons in shortage

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Definitions:

Normal Balance

The side (debit or credit) of an account that is expected to have a higher balance, according to the rules of double-entry accounting.

Debit

An accounting entry that results in either an increase in assets or a decrease in liabilities on a company's balance sheet.

Credit

An arrangement whereby goods, services, or money is received in exchange for a promise to pay back a definite sum of money at a future date.

Supplies

Items used in the operations of a business, often consumable, such as office supplies or factory supplies, not directly part of the finished product.