If a Shortage Exists in a Market, the Natural Tendency

question 19

Multiple Choice

If a shortage exists in a market, the natural tendency is for:

• A) demand to increase.
• B) price to increase.
• C) quantity supplied to decrease.
• D) no change in the market.

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Definitions:

Capital Investment

Funds invested in a business with the expectation of future returns, often in the form of physical assets or capital expenditures.

Recovery

The process of regaining possession or control of something stolen or lost, or the process of returning to a normal state of health, mind, or strength.

Average Rate

A value derived by dividing the sum of several rates by the number of rates, often used in financial calculations.

Capital Budgeting

The process of making investment decisions in long-term assets and projects.