What Effect Do Computer Chip Sellers' Expectations of Falling Chip

question 21

Multiple Choice

What effect do computer chip sellers' expectations of falling chip prices in the coming months have on the current computer chip market?

• A) The supply of computer chips increases, pushing down the equilibrium price and quantity.
• B) The supply of computer chips increases, pushing down the equilibrium price and increasing the equilibrium quantity.
• C) The demand for computer chips increases, pushing down the equilibrium price and increasing the equilibrium quantity.
• D) The demand for computer chips decreases, pushing down the equilibrium price and increasing the equilibrium quantity.

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Definitions:

Stock Splits

A corporate action to increase the number of outstanding shares, thereby reducing the price per share, without changing the market cap.

Residual Dividend Policy

A strategy where dividends paid to shareholders are set as the remainder after all project and operation expenses and investments are covered.

Residual Dividend Policy

A corporate approach to dividends where the amount distributed is based on profits remaining after all operational and expansion expenses are covered.

Common Stock

A type of equity security that represents ownership in a corporation, entitling the holder to vote at shareholder meetings and to receive dividends.