Exhibit 3-3 Demand Curves

question 103

Multiple Choice

Exhibit 3-3 Demand curves
Which of the graphs in Exhibit 3-3 depicts the effect of a decrease in the price of domestic cars on the demand for foreign cars?

• A) Graph A.
• B) Graph B.
• C) Graph C.
• D) Graph D.

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Definitions:

Finance Assets

Financial assets specifically purchased, created, or held for the purpose of generating income through investment or lending activities.

Financial Leverage

The use of borrowed funds with a fixed cost in order to increase the potential return to shareholders.

Incremental

Relating to or denoting an increase or addition, especially one of a series on a fixed scale.

After-tax Cost

The cost of financing or an expense after accounting for the effects of income tax, often used to compare the true costs of financing options.