During the Last Decade, the Price of a Computer Fell

question 328

Multiple Choice

During the last decade, the price of a computer fell every year and the quantity sold increased every year. This experience suggests that the

• A) "law of demand" was definitely contradicted.
• B) "law of supply" was definitely contradicted.
• C) demand curve shifted rightward.
• D) supply curve shifted rightward.

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Definitions:

Net Present Value

A valuation method that calculates the worth of a future stream of cash flows by discounting them back to their present value.

IRR

Internal Rate of Return; a financial metric used to estimate the profitability of potential investments, calculating an annual growth rate.

Profitability Index

A fiscal indicator that evaluates an investment's comparative profitability by calculating the ratio of the present value of future cash inflows to the upfront cost of the investment.

Present Value

The immediate worth of a future financial amount or sequences of cash flows, using a specified rate of return for calculation.