Refer to the Above Graph

question 148

Multiple Choice

Refer to the above graph.What will shift D₁ to D₂?

• A) An increase in the price of a substitute input (if the output effect is greater than the substitution effect)
• B) An increase in the price of a substitute input (if the substitution effect is greater than the output effect)
• C) A decrease in the price of a substitute input (if the substitution effect is greater than the output effect)
• D) An increase in the price of a complementary resource

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Definitions:

Net Present Value

The difference between the present value of cash inflows and outflows over a period of time, used in capital budgeting to assess profitability of investments.

Cash Inflows

Money received by a business from its operational, financing, or investing activities.

Payback Period

The time it takes for an investment to generate an amount of income or cash equal to the cost of the investment.

Net Cash Flow

The sum of all cash receipts minus all cash payments over a period, reflecting the company's liquidity position.