Suppose That the Price of Wheat Is Above Its Equilibrium

question 9

Multiple Choice

Suppose that the price of wheat is above its equilibrium price. You would expect to see

• A) a shortage on the market that causes prices to increase further.
• B) an increase in quantity demanded because of the high price.
• C) a leftward shift of the demand curve because of the high price.
• D) sellers begin to lower their prices because of the surplus of wheat.

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Definitions:

Earnings Per Share

A financial metric that indicates the portion of a company's profit allocated to each outstanding share of common stock, providing an indicator of the company's profitability.

Price-Earnings Ratio

is a measure of a company's current share price relative to its per-share earnings, used to evaluate if a stock is undervalued or overvalued.

Times Interest Earned

A financial ratio that measures a company's ability to meet its interest payments on outstanding debt, calculated by dividing earnings before interest and taxes (EBIT) by the interest expense.

Debt-To-Equity Ratio

A gauge for understanding the proportionate use of debt and equity by shareholders in the funding mechanisms for a company's assets.