If the Price of a Good Falls, Then the Equilibrium

question 105

Multiple Choice

If the price of a good falls, then the equilibrium consumption of that good:

• A) increases if it is an inferior good.
• B) decreases if it is a normal good.
• C) remains the same.
• D) None of the statements is correct.

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Definitions:

Accounts Receivable

Funds that customers owe to a business for products or services provided but not yet compensated for.

Liquidity

A measure of how easily assets can be converted into cash without significant loss in value.

Deposits in Transit

Funds that have been received and recorded by a business but not yet recorded by the bank, leading to a discrepancy in the accounting records until the deposit clears.

Currency

A system of money in general use in a particular country.