As the Price of a Good Rises

question 88

Multiple Choice

As the price of a good rises:

• A)firms generally decrease the supply of the good.
• B)more firms can cover their opportunity cost of producing the good.
• C)firms generally increase the supply of the good.
• D)government regulation becomes more justified.

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Definitions:

Retained Earnings

The portion of a company's profits that is held or retained and not distributed as dividends to shareholders, often reinvested in the business or used to pay off debt.

Cash Inflow

The total amount of money being transferred into a business, often from operations, investments, or financing.

Issue Common Shares

The process by which a corporation sells new shares to investors to raise capital.

Ceases Operations

The process when a business stops its principal business activities and ends its operations.