Economic Theory Predicted That the Price of a Depletable Resource

question 135

Multiple Choice

Economic theory predicted that the price of a depletable resource would rise by 10 percent.In reality, the price fell by 5 percent.Which of the following events could explain this discrepancy?

• A)Known reserves of the resource were depleted.
• B)The interest rate rose by 15 percent.
• C)Antitrust enforcement broke up a cartel among major suppliers of the resource.
• D)The government imposed an effective price floor.

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Definitions:

Cash Dividends

Payments made by a corporation to its shareholders out of its profits or reserves.

Investing Activities

Financial activities related to buying or selling long-term assets and investments, a key component of a company’s cash flow statement.

Financing Activities

Transactions that result in changes in the size and composition of the equity capital or borrowing of the company.

Cash Flows

The total amount of money being transferred into and out of a business, especially affecting liquidity.