Assume That the Market for Baseballs Is in Equilibrium

question 100

Multiple Choice

Assume that the market for baseballs is in equilibrium.There is a sudden decrease in income throughout the economy.If all else is held constant,we would expect that:

• A) if baseballs are an inferior good, then the demand curve will shift to the left, causing the equilibrium price and quantity to fall.
• B) if baseballs are a normal good, then the demand curve will shift to the right, causing the equilibrium price and quantity to rise.
• C) if baseballs are an inferior good, then the demand curve will shift to the right, causing the equilibrium price and quantity to fall.
• D) if baseballs are a normal good, then the demand curve will shift to the left, causing the equilibrium price and quantity to fall.
• E) if baseballs are a normal good, then the demand curve will shift to the left, causing the equilibrium price and quantity to rise.

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Definitions:

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life, reflecting wear and tear or obsolescence.

Long-Run Exposure

Financial risk faced by a company due to fluctuating exchange rates affecting the value of its foreign currency denominated transactions over time.

Financial Statements

Compiled records that convey the financial activities and condition of a business, including the balance sheet, income statement, and cash flow statement.

Foreign Currency Approach

A method used in financial analysis and reporting that involves converting transactions or balances in foreign currencies into the functional currency.