Over the Last Few Years, Demand for DVDs Has Increased

question 112

Multiple Choice

Over the last few years, demand for DVDs has increased, and yet their equilibrium price has fallen.Which of the following best explains this situation?

• A)When the price falls, the quantity supplied increases.
• B)There has been a shortage of DVDs.
• C)The supply of DVDs must have decreased.
• D)The demand curve for DVDs slopes upward, so an increase in demand leads to a lower price.
• E)The supply of DVDs must have increased more than the demand for DVDs increased.

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Definitions:

Yield

It refers to the earnings generated and realized on an investment over a particular period, expressed as a percentage.

Duration

A measure of the average life of a bond, defined as the weighted average of the times until each payment is made, with weights proportional to the present value of the payment.

Bond

A fixed income instrument that represents a loan made by an investor to a borrower, typically corporate or governmental.

Zero-Coupon Bond

A bond paying no coupons that sells at a discount and provides only payment of face value at maturity.