An Increase in Demand for a Normal Product Might Occur

question 17

Multiple Choice

An increase in demand for a normal product might occur because of:

• A) A rise in the price of a complement
• B) A fall in the price of a substitute
• C) An increase in the number of customers
• D) An increase in supply

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Definitions:

Total Equity

Total equity refers to the amount of owner's interest in a company, calculated as the difference between total assets and total liabilities.

Unlevered Rate

The unlevered rate refers to the return on an investment or the cost of capital without considering the impact of financial leverage, representing the risk of an investment independent of its capital structure.

Cost of Debt

The actual rate at which a corporation incurs cost on its existing financial obligations, such as bonds and loans.

Debt/Equity Ratio

A financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets, often used to assess financial leverage.