What Happens When There Is a Surplus in a Market

question 304

Multiple Choice

What happens when there is a surplus in a market?

• A) There is upward pressure on price.
• B) There is downward pressure on price.
• C) The market is operating below the equilibrium level.
• D) There are too many buyers chasing too few goods.

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Definitions:

Average Rate of Return

A financial ratio that compares the average annual profit of an investment to its initial cost, often used to assess the profitability of an investment over time.

Present Value Factors

Multipliers used to calculate the present value of a future amount of money or stream of cash flows given a specific discount rate.

Net Present Value

A financial metric that evaluates the profitability of an investment or project by calculating the present value of expected future cash flows, minus the initial investment cost.

Annuity

A financial instrument that disburses a set series of payments to a person, often employed as a revenue flow for individuals in retirement.