In the Short Run, an Increase in Demand for a Good

question 2

Multiple Choice

In the short run, an increase in demand for a good that is sold in a perfectly competitive market

• A) increases the number of firms in the market.
• B) has no effect on the price.
• C) increases the economic profits of existing firms in the market.
• D) causes more firms to shut down.

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Definitions:

Internal Rate of Return

A metric used in finance to estimate the profitability of potential investments, calculating the rate of return where the net present value of all cash flows is equal to zero.

Cash Inflows

Funds entering a business from various sources like sales, financing, and investments.

Minimum Required Rate

The lowest rate of return or yield that an investor expects or requires from an investment.

Internal Rate of Return

The discount rate at which the net present value of all cash flows (both positive and negative) from a project or investment equals zero.