Under the FIFO Flow Assumption, the Cost of These Items

question 9

Multiple Choice

Under the FIFO flow assumption, the cost of these items to be included in inventory in the company's year-end balance sheet is:

• A) $36,000.
• B) $36,500.
• C) $42,000.
• D) $37,500.

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Definitions:

Equilibrium Quantity

The quantity of goods supplied is equal to the quantity of goods demanded at the market equilibrium price.

Substitutes

Goods or services that can replace each other in use, where an increase in the price of one leads to an increase in demand for the other.

Inferior Good

A type of good for which demand decreases as the income of consumers increases.

Demand Curve

A diagram that shows how the quantity of a product demanded by buyers changes according to its price.