When the Price of a Commodity Falls, We Can Expect

question 9

Multiple Choice

When the price of a commodity falls, we can expect

• A)total utility will fall.
• B)marginal utility of the last unit purchased will fall.
• C)marginal utility of the last unit purchased will rise.
• D)purchases will fall because of a change in marginal utility.

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Definitions:

Discount Rate

The interest rate used in discounted cash flow (DCF) analysis to determine the present value of future cash flows.

Fair Value Enterprise Method

An accounting approach for valuing a subsidiary company at its current market value rather than its book value or cost in the financial statements of a parent company.

Identifiable Net Assets

Assets that can be separately identified and measured apart from the business entity, often relevant in the valuation of companies for acquisition or reporting purposes.

Non-Controlling Interest

The portion of equity in a subsidiary not owned directly or indirectly by the parent company.