Exhibit 4.6 -Suppose the Market for Kids' Shoes Is Initially in Equilibrium

question 36

Multiple Choice

Exhibit 4.6

-Suppose the market for kids' shoes is initially in equilibrium. For a given upward-sloping supply curve, other things being equal, an increase in the price of Velcro which is used as fasteners for kids' shoes will result in a(n) _____

• A) increase in both the equilibrium price and quantity of shoes.
• B) increase in both the quantity demanded and quantity supplied of shoes.
• C) increase in the equilibrium price but a decrease in the equilibrium quantity of shoes.
• D) decrease in the equilibrium price but an increase in the equilibrium quantity of shoes.
• E) decrease in both the quantity demanded and the quantity supplied of shoes.

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Definitions:

Profit Distributions

The allocation of a portion of a company's earnings to its shareholders, typically in the form of dividends or share buybacks.

De Facto Corporation

A business operating as if it were a legally incorporated company, despite not having completed the formal incorporation process, and is often treated as such by the law under certain conditions.

Creditor

An entity to which a debtor owes money.

Incorporator

A person or entity that signs the articles of incorporation, thereby initiating the creation of a corporation.