Suppose a Decrease in the Supply of Wheat Results in an Increase

question 71

Multiple Choice

Suppose a decrease in the supply of wheat results in an increase in revenue.This indicates that

• A) the decrease in quantity sold is proportionately larger than the resulting change in price.
• B) the resulting increase in price is proportionately greater than the decrease in quantity sold.
• C) the demand curve for wheat must be vertical.
• D) the supply curve for wheat must be vertical.

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Definitions:

Financing Costs

Expenses incurred by an entity in borrowing funds, including interest, fees, and other charges associated with the issuance of debt.

Incremental Cash Flow

The additional cash flow generated by a company from a new project or investment, after accounting for expenses.

Capital Budgeting Analysis

Capital budgeting analysis is the process of evaluating and selecting long-term investments that are in alignment with the goal of a company's shareholders' wealth maximization.

Opportunity Cost

The cost of choosing one option over another, representing the benefits an individual, investor, or business misses out on when choosing one alternative over another.