If the Price of a Good Rises, Then the Equilibrium

question 50

Multiple Choice

If the price of a good rises, then the equilibrium consumption of that good

• A)increases if it is an inferior good.
• B)decreases if it is a normal good.
• C)remains the same.
• D)none of the statements associated with this question are correct.

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Definitions:

Present Value

The current value of a future amount of money or stream of cash flows, discounted at a specific interest rate.

Capital Lease

A capital lease is a lease classified by the lessee as an asset on its balance sheet, indicating that it effectively has the economic ownership of the asset, even though legally it may not own the asset.

Lease Liability

An obligation representing future lease payments a lessee is required to make under a lease agreement.

Discount Rate

The discount rate applied in calculating the present value of future cash flows during discounted cash flow analysis.