Suppose the Market for a Good Is in Equilibrium

question 76

Multiple Choice

Suppose the market for a good is in equilibrium. Which of the following is most likely to occur if both the demand for and the supply of the good decrease during a particular point in time?

• A) The equilibrium price will increase.
• B) The equilibrium price will decrease.
• C) The equilibrium quantity will increase.
• D) The equilibrium quantity will decrease.
• E) Both the equilibrium price and quantity will increase.

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Definitions:

Total Asset Turnover

A financial ratio that measures the efficiency of a company's use of its assets to generate sales revenue.

Return On Equity

A measure of financial performance calculated by dividing net income by shareholders' equity, indicating how efficiently a company uses its equity investments to generate profit.

Times Interest Earned Ratio

A financial metric that measures a company's ability to meet its debt obligations based on its current income.

Depreciation Expense

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the loss in value as it ages, used for accounting and tax purposes.