If the Current Market Price of Good Z Is Below

question 11

Multiple Choice

If the current market price of good Z is below the equilibrium price of good Z

• A) it must be because the government has imposed a price ceiling in the market for good Z.
• B) there is a shortage of good Z.
• C) there is a surplus of good Z.
• D) demand must necessarily decrease to restore equilibrium.
• E) a and b

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Definitions:

Financial Leverage

The use of borrowed funds ("debt") to amplify returns from an investment or project.

Price Earnings Ratio

A financial metric comparing the current price of a company's stock to its earnings per share to assess whether the stock is undervalued or overvalued.

Earnings Per Share

A financial ratio that measures the amount of a company's profit allocated to each outstanding share of common stock.

Market Value

The financial value at which an asset could be bought or sold in the market.