Suppose That Many Coal Mines Are Shut for Environmental Reasons

question 90

Multiple Choice

Suppose that many coal mines are shut for environmental reasons. This will cause

• A)a movement up the supply curve.
• B)a decrease in the supply of coal (a leftward shift of the supply curve).
• C)no change in the supply curve, only a change in price.
• D)an increase in the supply of coal (a rightward shift of the supply curve).
• E)a movement down the supply curve.

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Definitions:

Lease Liability

An obligation representing the present value of future lease payments that a lessee is committed to making under a lease agreement.

Cost of Capital

The rate of return a company must earn on its investments to maintain its market value and attract funds.

Capitalized Lease

A lease arrangement that is recorded as an asset on the lessee's balance sheet, indicating that the lessee assumes some of the risks and benefits of ownership.

Fair Market Value

The price at which an asset would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts.