Refer to the Accompanying Figure

question 52

Multiple Choice

Refer to the accompanying figure. Suppose the solid line represents the current supply of Star Wars action figures. If the price of the plastic used to make action figures rises, current supply will:

• A)shift to S(B).
• B)not change because a change in the price of plastic will not affect the demand for action figures.
• C)shift to S(A).
• D)not change; only the quantity supplied will change.

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Definitions:

Annual Return

The percentage of increase or decrease in an investment's value over a one-year period.

Present Value Factors

Present value factors are numerical values used to calculate the present value of a future amount of money or stream of cash flows given a specific interest rate.

Depreciation

The deliberate allocation of a physical asset's expenditure throughout its usable life.

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period of time, used in capital budgeting to assess the profitability of an investment.