Consider a Market That Is in Equilibrium

question 3

Multiple Choice

Consider a market that is in equilibrium. If the market experiences a decrease in supply:

• A) the equilibrium price and quantity will rise.
• B) the equilibrium price will rise and the equilibrium quantity will fall.
• C) the equilibrium price and quantity will fall.
• D) the equilibrium price will fall and the equilibrium quantity will rise.

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Definitions:

Straight-Line Depreciation

A method of calculating the depreciation of an asset, which allocates an equal amount of the asset’s cost to each year of its useful life.

Residual Value

The projected worth of an asset at the conclusion of its service life, considering the deductions for depreciation.

Useful Life

The estimated period a fixed asset is expected to be useful for its intended purpose, affecting depreciation calculations.

Double Declining Balance

An accelerated method of depreciation which doubles the rate at which an asset is depreciated compared to the straight-line method.