When Industry Has Excess Capacity, Market Prices May Drop Sizably

question 13

Multiple Choice

When industry has excess capacity, market prices may drop sizably below their historical average.If this drop is temporary, it is called

• A)distress pricing.
• B)dropped pricing.
• C)low-average pricing.
• D)substitute pricing.
• E)fire sale.

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Definitions:

Financing Agreement

A financing agreement is a legal contract between a borrower and a lender outlining the terms for borrowing money, including repayment schedule, interest rates, and any collateral.

Disaffirmance Reasonable

The act of renouncing or voiding a contract or agreement, especially by a party who was not in a position to legally enter into the contract initially, under conditions considered to be fair or just.

Employment Contract

A formal agreement between an employer and an employee outlining the terms and conditions of employment.

Arbitration Agreement

A contract in which parties agree to settle disputes through arbitration rather than litigation in courts.