A Decrease in the Price of DVD Players Leads Consumers

question 425

Multiple Choice

A decrease in the price of DVD players leads consumers to buy more DVD players. From this information we can conclude that DVD players

• A)are normal goods.
• B)are inferior goods.
• C)are luxury goods.
• D)could be any of the above.

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Definitions:

Preference

In finance, this term relates to shares or securities that have priority over common shares in the payment of dividends and upon liquidation.

Profitability Index

A calculation that determines the relative profitability of an investment, calculated by dividing the present value of future cash flows by the initial investment cost.

Investment Projects

Initiatives undertaken by businesses or individuals that involve committing resources with the expectation of generating future financial returns.

Present Value

The current worth of a future sum of money or stream of cash flows, given a specified rate of return.