If the Demand for a Product Increases, We Would Expect

question 91

Multiple Choice

If the demand for a product increases, we would expect that price will initially ________, and eventually ________.

• A) rise; fall
• B) rise; continue to rise
• C) fall; rise
• D) fall; continue to fall

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Definitions:

Equivalent Annual Annuity

A method used in financial analysis to compare the profitability of investments with differing durations by converting values into equal annual payments.

WACC

Weighted Average Cost of Capital; a calculation of a firm's cost of capital in which each category of capital is proportionally weighted.

Discounted Payback

A capital budgeting procedure that calculates the time required to break even from an investment, accounting for the time value of money.

Cash Flow

The net amount of cash being transferred into and out of a business, a key indicator of financial health.