When There Is Excess Supply of a Product in a Market

question 60

Multiple Choice

When there is excess supply of a product in a market,

• A) price will tend to rise.
• B) price must be above the equilibrium price.
• C) producers will expand output and sales will rise.
• D) price must be below the equilibrium price.

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Definitions:

Tax Shield

The reduction in income taxes that results from taking allowable deductions from taxable income.

Depreciable Asset

A depreciable asset is a type of property that an organization can write off as an expense over time due to its potential to lose value, such as buildings, machinery, and equipment.

Total Cost Approach

A method of analysis that involves assessing all costs associated with a decision, including initial costs and ongoing operational costs.

Discount Rate

The interest rate used in discounting future cash flows to present value, often reflecting the cost of capital or risk level.