If You Produce an Inferior Good and Consumers' Incomes Are

question 4

Multiple Choice

If you produce an inferior good and consumers' incomes are expected to decrease, you should anticipate a________ price for your product than the current equilibrium price and a________ equilibrium quantity than the current equilibrium quantity.

• A)higher; higher
• B)higher; lower
• C)lower; higher
• D)lower; lower

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Definitions:

Permanent Working Capital

The minimum amount of working capital a company needs to sustain its daily operations continuously.

Aggressive Working Capital Policy

A strategy involving higher levels of current assets relative to liabilities, aiming for growth but increasing liquidity risk.

Short Term Financing

Borrowing funds for a period typically less than one year, often used to cover gaps in cash flow or finance immediate expenses.

Temporary Working Capital

Additional working capital required to support the fluctuating operational needs of a business beyond its permanent working capital.