Suppose the Supply of Product X Is Perfectly Inelastic

question 221

Multiple Choice

Suppose the supply of product X is perfectly inelastic. If there is an increase in the demand for this product, equilibrium price

• A)will decrease, but equilibrium quantity will increase.
• B)and quantity will both decrease.
• C)will increase, but equilibrium quantity will decline.
• D)will increase, but equilibrium quantity will be unchanged.

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Definitions:

Cash Flows

The entire scope of capital flow inbound and outbound of an enterprise, distinctly affecting its cash availability.

Discount Rate

The discount rate in discounted cash flow analysis that’s used for the purpose of evaluating the present worth of future cash flows.

Present Value

The current value of a future sum of money or stream of cash flows given a specified rate of return, used in discounting to assess investment opportunities.

Per Year

A term used to specify the occurrence or calculation of something on an annual basis.