Figure 14-14

question 11

Multiple Choice

Figure 14-14
-Refer to Figure 14-14. Assume that the market starts in equilibrium at point W in panel (b) and that panel (a) illustrates the cost curves facing individual firms. Suppose that demand increases from D0 to D1. Which of the following statements is correct?

• A)Points W, Y, and Z represent both short-run and long-run equilibria.
• B)Points W, Y, Z, and X represent short-run equilibria.
• C)Points W, Y, and Z represent long-run equilibria.
• D)Points W and Z represent long-run equilibria.

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Definitions:

Direct Method

An accounting method used to allocate service department costs directly to producing departments without considering services rendered between service departments.

Cost of Goods Sold

The immediate expenses directly related to the manufacture of products sold by a business, encompassing costs for materials, labor, and overhead.

Comparative Balance Sheet

A financial statement that presents the financial position of a company at two or more different points in time, side-by-side, to facilitate comparison.

Direct Method

An accounting approach where costs are directly traced to objects, such as products or services, without using cost drivers or allocation bases.