Assume the Market in the Graph Shown Was Originally at an Equilibrium

question 34

Multiple Choice

Assume the market in the graph shown was originally at an equilibrium with demand D and supply S. The original equilibrium price and quantity were, respectively:

• A) $5 and 30.
• B) $5 and 20.
• C) $10 and 20.
• D) $20 and 10.

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Definitions:

Soft Rationing

Internal limitations set by a company on the amount of funds allocated for new investments or projects.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, demonstrating the proportion of fixed versus variable costs a company has.

Fixed Costs

Expenses that remain constant regardless of how much is produced or sold, including rent, salaries, and insurance costs.

Accounting Break-Even

The point where total sales equal total expenses, and the company makes no profit but also incurs no loss.