Figure 38 Alt Text for Figure 3

question 86

Multiple Choice

Figure 3.8 Alt text for Figure 3.8: In figure 3.8, a graph plotting intersecting supply and demand curves represents the market for canvas tote bags.
Long description for Figure 3.8: The x-axis is labelled, Quantity, with the values 0, 10, 20, 50, 75, and 100 marked.The y-axis is labelled, Price, with the values 0, 15, 25, and 50 dollars marked.Curve D is a straight line which slopes down from the top left corner to the bottom right corner.Curve S is a straight line which begins in the bottom left corner and slopes up to the top right corner.The equilibrium of the 2 curves is (50,25) .The point plotted on curve S to the left of equilibrium is (20,15) .The point plotted on curve D to the right of point of equilibrium is (75,15) .The point plotted to the right of equilibrium on curve S is (100,50) .The point plotted to the right of the equilibrium on curve D is (10,50) .
-Refer to Figure 3.8.The figure above represents the market for canvas tote bags.Assume that the price of tote bags is $15.At this price,

• A)the quantity demanded exceeds the quantity supplied of tote bags by 75.The price will eventually rise to $25 where quantity demanded will equal quantity supplied.
• B)the demand exceeds the supply of tote bags by 55.Some consumers will have an incentive to offer to buy tote bags at a higher price.
• C)there is a shortage equal to 55 tote bags; the price of tote bags will rise until demand is equal to supply.
• D)there is a shortage, equal to 55 tote bags, that will be eliminated when the price rises to $25.

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Definitions:

Net Present Value

A method used in capital budgeting to determine the profitability of an investment or project, by calculating the difference between the present value of cash inflows and outflows over a period of time.

Annual Cash Inflows

The total amount of money received by a business, project, or investment on an annual basis from its operational activities.

Discount Rate

The interest rate used to discount future cash flows to present value, often used in capital budgeting.

Annual Net Cash Inflow

The total amount of money that flows into a company annually after all cash outflows are subtracted.