Refer to the Information Provided in Figure 5

question 40

Multiple Choice

Refer to the information provided in Figure 5.6 below to answer the question that follows. Figure 5.6
-Refer to Figure 5.6. The market is initially in equilibrium at Point A and supply shifts from S1 to S2. Which of the following statements is true?

• A) Price will still serve as a rationing device causing quantity supplied to exceed 12 thousand pizzas.
• B) There is no need for price to serve as a rationing device in this case because the new equilibrium quantity exceeds the original equilibrium quantity.
• C) Price will still serve as a rationing device causing quantity demanded to fall from 12 to 10 thousand pizzas.
• D) The market cannot move to a new equilibrium until there is also a change in demand.

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Definitions:

Closing Entry

Journal entries made at the end of an accounting period to transfer the balances of temporary accounts to permanent accounts, thereby resetting the temporary accounts for the next period.

Revenue and Expense Account Balances

Represents the amounts recorded in the financial statements for income earned and costs incurred by a company during a reporting period.

Adjusting Entry

A journal entry made at the end of an accounting period to allocate revenue and expenses to the correct periods.

Earnings Per Share

A financial metric calculated by dividing the net earnings available to common shareholders by the average outstanding shares.