If a Market Is NOT at Equilibrium

question 24

Multiple Choice

If a market is NOT at equilibrium

• A) supply will shift until the market reaches equilibrium.
• B) demand will shift until the market reaches equilibrium.
• C) both supply and demand will shift until the market reaches equilibrium.
• D) the price will change and, in response, market participants will move along the existing supply and demand curves until the market reaches equilibrium.

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Definitions:

Value Of Equity

The total value of a company's shares of stock held by all its shareholders, including share capital plus retained earnings.

Notes Payable

Short-term or long-term liabilities recorded when a company borrows money, often in the form of a promissory note.

Common Stock

Common stock represents units of ownership in a corporation, granting shareholders voting rights and potentially dividends, but also placing them last in priority for company assets upon liquidation.

Retained Earnings

Profits not distributed to shareholders as dividends but instead reinvested in the company's core business or used to pay off debt.