A Decrease in the Current Asset to Total Asset Ratio

question 48

Multiple Choice

A decrease in the current asset to total asset ratio will result in ________.

• A) an increase in risk
• B) a decrease in risk
• C) an increase in profit
• D) a decrease in profit

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Definitions:

Quasilinear Utility

A utility function where one good (usually money) enters linearly and therefore preferences for other goods are independent of the amount of money.

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, indicating the good's sensitivity to price changes.

Income Elasticity

A measure of how much the demand for a good or service changes in response to changes in the consumer's income.

Inverse Demand Function

A function that represents the price of a good as a function of the quantity demanded.