Two Events Occur Simultaneously in the Market for Automobiles: (1)an

question 118

Multiple Choice

Two events occur simultaneously in the market for automobiles: (1) an improvement in assembly line technology and (2) a recession in the economy that decreases consumers' income.Which of the following can be predicted about this market with certainty?

• A)Equilibrium quantity will rise.
• B)Equilibrium quantity will fall.
• C)Equilibrium price will rise.
• D)Equilibrium price will fall.
• E)Equilibrium price will remain the same.

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Definitions:

Salvage Value

is the estimated resale value of an asset at the end of its useful life, important for depreciation calculations.

Outflow

The movement of money out of a business or financial account, often associated with expenses or investments.

Payback Period

The length of time that it takes for a project to fully recover its initial cost out of the net cash inflows that it generates.

Working Capital

The amount of a company's current assets minus its current liabilities, indicating the short-term financial health and operational efficiency of a business.