If the Quantity Demanded for Cars Is Lower Than the Quantity

question 84

Multiple Choice

If the quantity demanded for cars is lower than the quantity supplied,we can expect that:

• A)the price of cars will increase.
• B)the price of cars will not change.
• C)car manufacturers will increase their production of cars.
• D)the price of cars will decrease.

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Definitions:

Pre-Tax Cost

The price of a good or service before any taxes are applied.

Cost of Equity

The return that shareholders require for investing in a company’s equity.

Return on Assets

A financial ratio that indicates how profitable a company is relative to its total assets by dividing net income by total assets.

Return on Debt

A measure of how much profit a company generates for every dollar of debt, indicating the efficiency of using borrowed funds.