Given That Elasticity of Supply Changes Over Time, in the Short

question 59

Multiple Choice

Given that elasticity of supply changes over time, in the short run an increase in demand will generally cause

• A) the quantity exchanged to rise above its long- run equilibrium value.
• B) the price to rise to a level below its long- run equilibrium value.
• C) the price to rise above its long- run equilibrium value.
• D) both price and quantity exchanged to rise above their long- run equilibrium values.
• E) supply to change.

Understand the impact of risk on the cost of capital components and the overall WACC.

Understand the relationship between the returns required by investors and the firm's cost of capital components.

Recognize the significance of market values in calculating the cost of capital over book values.

Know the concept of target capital structure and its relevance to the WACC.

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