If There Is a Decrease in Demand for a Product

question 1

Multiple Choice

If there is a decrease in demand for a product in a purely competitive industry, it results in an industry contraction that will end when the product price is

• A) greater than its marginal cost.
• B) equal to its marginal cost.
• C) less than its marginal cost.
• D) greater than its average cost.

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Definitions:

Inventory Loan

A secured short-term loan to purchase inventory.

Cash Disbursement

The payment of money from a fund or account, typically involving the transfer of cash to individuals or companies for services rendered or goods purchased.

Operating Cycle

The period from purchasing inventory to collecting cash from the sale of that inventory.

Accounts Receivable Financing

A type of financing arrangement in which a company uses its receivables as collateral for a loan, effectively selling its right to future payments in exchange for immediate cash.