Holding All Else Equal, If Supply Increases, The

question 12

Multiple Choice

Holding all else equal, if supply increases, the:

• A) equilibrium price will decrease while the quantity produced and sold could increase, decrease or remain constant.
• B) quantity produced and sold will increase while the equilibrium price could increase, decrease, or remain constant.
• C) equilibrium price will increase while the quantity produced and sold could increase, decrease or remain constant.
• D) none of these.

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Definitions:

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year, calculated by dividing current assets by current liabilities.

Current Assets

Resources a business plans to change into cash, dispose of, or use up within either a year or its operating cycle, depending on which period extends further.

Current Liabilities

Financial obligations of a business that are due and payable within one year.

Total Liabilities

The sum of all financial obligations a company owes to outside parties, including loans, accounts payable, and mortgage obligations.