An Increase in the Size of the Market Due to the Creation

question 217

Multiple Choice

An increase in the size of the market due to the creation of a free trade area

• A)reduces the equilibrium price and increases the number of firms.
• B)increases the equilibrium price and increases the number of firms.
• C)reduces the equilibrium price and decreases the number of firms.
• D)increases the equilibrium price and decreases the number of firms.
• E)has no effect on equilibrium price and decreases the number of firms.

---

Definitions:

Short-Term Financial Policy

A strategic approach focusing on managing a company's short-term liabilities and assets, vital for ensuring liquidity and operational efficienc.

Financial Distress

A situation where a company cannot meet or has difficulty paying off its financial obligations to creditors, potentially leading to bankruptcy.

Net Working Capital

The disparity between a business's present assets and its immediate obligations, showcasing the company's short-term financial health.