What Will Happen If Both the Demand for and Supply

question 22

Multiple Choice

What will happen if both the demand for and supply of a product increase simultaneously?

• A)The effect on the price is indeterminate.
• B)The price will increase.
• C)The price will decrease.
• D)The effect on quantity traded is indeterminate.

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Definitions:

Straight-Line Depreciation

A process for dividing the expense of a tangible asset uniformly across its expected lifetime in annual segments.

Net Annual Operating

Typically refers to the net operating income or profit generated by a business over the course of a year, excluding non-operating revenues and expenses.

After-Tax Discount Rate

The rate used to discount future cash flows of an investment after taxes have been accounted for, reflecting the investor's required rate of return net of taxes.

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term liquidity.