Suppose That a Technological Advancement Substantially Reduces the Cost of Producing

question 89

Multiple Choice

Suppose that a technological advancement substantially reduces the cost of producing cheese.We would predict that the equilibrium quantity of cheese will ________ and the equilibrium price of cheese will ________.

• A) rise; rise
• B) rise; fall
• C) fall; rise
• D) fall; fall

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Definitions:

Preferred Shares

A class of ownership in a corporation that has a higher claim on its assets and earnings than common shares, often with predetermined dividend payments.

Common Shares

A type of equity ownership in a corporation, with voting rights and the potential to receive dividends.

Debt to Total Assets Ratio

A financial metric indicating the proportion of a company's assets financed through debt, reflecting financial leverage and risk.

Total Assets

The sum of all reported assets owned by a company, including both current and non-current assets, reflecting the total resources at its disposal.