An Excess Quantity Supplied Can Be Corrected by

question 21

Multiple Choice

An excess quantity supplied can be corrected by

• A) a fall in price.
• B) legally fixing the price at its present level.
• C) a decrease in demand.
• D) an increase in supply.

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Definitions:

Excess Capacity Scenario

A situation in which a company can produce more goods than the market demands, often leading to unused resources or facilities.

Internal Growth Rate

The maximum growth rate a firm can achieve without external financing, driven by its own operations and reinvested earnings.

Debt-Equity Ratio

A financial ratio portraying the comparative financing approach using debt and equity for assets.

Plowback Ratio

The proportion of earnings that a company retains and reinvests into its operations rather than distributing as dividends.