Figure 3-8 -Refer to Figure 3-8.The Graph in This Figure Illustrates an Figure

question 90

Multiple Choice

Figure 3-8
-Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D₁ and S₂ (point B) .If there is an increase in number of companies producing motorcycles and a decrease in income (assume motorcycles are a normal good) ,the equilibrium could move to which point?

• A)A
• B)B
• C)C

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Definitions:

Discount

A reduction from the usual cost of something, often expressed as a percentage off the original price.

Convertible Bond

A financial instrument that allows the bondholder to convert the bond into a predetermined number of shares of common stock of the issuing company.

Market Value

The dollar amount required to replace the inventory as of the inventory date.

Stock Selling

The process of disposing shares of a company to investors in exchange for capital, also referred to as stock trading when done frequently.