Suppose That the Garden Gnome Industry Was in Long-Run Equilibrium

question 7

Multiple Choice

Suppose that the garden gnome industry was in long-run equilibrium given the circumstances described .Suppose, that it was discovered to everyone's surprise on January 1, 1993, after it was too late to change orders for gnome molds, that the cost of the plaster and labor needed to make a gnome had changed to $8.If the demand curve does not change, what will happen to the equilibrium price of gnomes?

• A)Rises by $1.
• B)Falls by $1.
• C)Stays constant.
• D)Rises by $8.
• E)Falls by $4.

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Definitions:

Statement Of Cash Flows

A financial statement showing the inflows and outflows of cash and cash equivalents over a specific period, categorizing them into operating, investing, and financing activities.

Management Prediction

Forecasts or projections made by a company's management regarding future business conditions, operational performance, or financial outcomes.

Creditor Evaluation

The process of assessing the creditworthiness of a business or individual, analyzing their ability to repay debts.

Operating Activities

Operating activities involve the primary revenue-generating activities of a business, such as sales and delivery of goods/services, and are reflected in the cash flow statement.