Suppose That Demand for a Good Increases And, at the Same

question 54

Multiple Choice

Suppose that demand for a good increases and, at the same time, supply of the good decreases. What would happen in the market for the good?

• A)Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous.
• B)Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous.
• C)Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous.
• D)Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.

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Definitions:

Per Share Value

The financial value of a single share of a company's stock, representing a fraction of the corporation's assets and earnings per share.

Market Value

The prevailing market rate at which a service or asset is available for purchase or sale.

Paid-in Capital

The total amount of money investors have contributed to a company in exchange for shares of stock.

Stock Dividend

A dividend payment made in the form of additional shares rather than cash, increasing the number of shares owned by shareholders.