If a Surplus Exists in a Market, Then We Know

question 229

Multiple Choice

If a surplus exists in a market, then we know that the actual price is

• A)above the equilibrium price, and quantity supplied is greater than quantity demanded.
• B)above the equilibrium price, and quantity demanded is greater than quantity supplied.
• C)below the equilibrium price, and quantity demanded is greater than quantity supplied.
• D)below the equilibrium price, and quantity supplied is greater than quantity demanded.

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Definitions:

Average Cost Method

Uses the weighted average unit cost of the goods available for sale for both cost of goods sold and ending inventory.

Cost of Goods Sold

Direct expenditures involved in producing the merchandise a business sells.

FIFO Cost Flow

An inventory valuation method where the first items purchased are the first ones to be sold, assuming costs rise over time.

Ending Inventory

The total value of goods available for sale at the end of an accounting period, calculated by adding purchases to the beginning inventory and subtracting the cost of goods sold.