Figure 2.3 -In Figure 2.3, the Initial Demand Curve Is D₁ and Curve

question 170

Multiple Choice

Figure 2.3

-In Figure 2.3, the initial demand curve is D₁ and the supply curve is S₁. If the price of a substitute good increases, what is the most likely result?

• A) Demand will shift to D₂.
• B) Equilibrium will move from A to E.
• C) Equilibrium will move from A to C.
• D) Equilibrium will move from A to D.
• E) Demand will shift to D₃.

---

Definitions:

Firm Commitment

A firm commitment refers to an underwriter's agreement to assume all inventory risk and purchase all securities directly from the issuer for sale to the public.

Underwriter

A professional who assesses and accepts the risk of an insurance policy or security, determining pricing and coverage.

Direct Costs

Expenses that can be directly tied to the production of specific goods or services, such as raw materials and labor.

Amortization

The gradual reduction of a debt or the spreading out of capital expenses for intangible assets over a specific period of time, often through regular payments.