If the Demand for a Product Remains the Same and the Supply

question 193

Multiple Choice

If the demand for a product remains the same and the supply falls,

• A) the market clearing price will fall and the equilibrium quantity will rise.
• B) the market clearing price will rise and the equilibrium quantity will fall.
• C) both the market clearing price and the equilibrium quantity will fall.
• D) both the market clearing price and the equilibrium quantity will rise.

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Definitions:

Accuracy

The degree to which the result of a measurement, calculation, or specification conforms to the correct value or a standard.

FIFO Costing Assumption

An inventory valuation method that assumes the items purchased or produced first are sold first, thereby calculating the costs based on earliest prices.

Income Taxes

Taxes levied by governments on the income generated by individuals or businesses.

LIFO Assumption

A method of inventory valuation where the last items placed into inventory are the first ones to be used or sold.