Assume That the Demand Curve for MP3 Players Shifts to the Right

question 170

Multiple Choice

Assume that the demand curve for MP3 players shifts to the right and the supply curve for MP3 players shift to the left, but the supply curve shifts less than the demand curve.As a result

• A)both the equilibrium price and quantity of MP3 players will decrease.
• B)both the equilibrium price and quantity of MP3 players will increase.
• C)the equilibrium price of MP3 players may increase or decrease; the equilibrium quantity will decrease.
• D)the equilibrium price of MP3 players will increase; the equilibrium quantity will decrease.

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Definitions:

Effective Annual Cost

This term refers to the total cost of borrowing on an annual basis, including interest and any fees, taking compounding into account.

Nominal Cost

The original cost of an asset or investment, not adjusted for inflation or other factors affecting its current value.

Trade Credit

An arrangement to buy goods or services on account, that is, without making immediate cash payment, usually evidenced by an invoice.

Nominal Annual Cost

The stated annual cost of borrowing or investing, without adjusting for the compounding of interest or for inflation.