Velcro Is Becoming More and More Popular for a Variety

question 203

Multiple Choice

Velcro is becoming more and more popular for a variety of uses, including as fasteners for shoes. What should happen to the equilibrium price and quantity for shoelaces as a result?

• A) Both price and quantity will increase.
• B) Both price and quantity will decrease.
• C) Price will increase and quantity decrease.
• D) Price will decrease and quantity increase.
• E) Nothing.

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Definitions:

Discount Rate

The interest rate used to discount future cash flows to their present value, enabling comparison of the value of investments made at different times.

Net Present Value

A method used to evaluate investments by calculating the present value of expected future cash flows minus the initial investment cost.

Cash Inflows

Refers to the money received by a company during a particular period, including revenues from sales, investments, and financing activities.

Minimum Acceptable Rate

The lowest rate of return on an investment that a manager or investor is willing to accept.