If Demand Is Highly Elastic and Supply Shifts to the Right

question 148

Multiple Choice

If demand is highly elastic and supply shifts to the right:

• A) price will fall significantly; quantity hardly changes at all.
• B) price will hardly change at all; quantity will rise significantly.
• C) price will rise significantly as will quantity.
• D) price and quantity will hardly change at all.

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Definitions:

Firm's Managers

Individuals responsible for making significant corporate decisions and managing the overall operations and resources of a business.

Capital Budgeting

The process by which a business determines and evaluates potential expenses or investments that are significant in amount.

Project Cash Flows

Refers to the net amount of cash being transferred into and out of a project, considering all revenues, expenses, and capital costs over its life.

Risk

In finance, risk is the potential for financial loss or the variability in the returns of an investment.