If There Is a Decline in the Price of Milk

question 172

Multiple Choice

If there is a decline in the price of milk, an input in the production of ice cream, then there will be a(n)

• A) decrease in the supply of ice cream and a leftward shift of the supply curve.
• B) decrease in the quantity of ice cream supplied and a movement up along the supply curve.
• C) increase in the supply of ice cream and a rightward shift of the supply curve.
• D) increase in the quantity of ice cream supplied and a movement down along the supply curve.

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Definitions:

Ordinary Annuity

Consecutive settlements of equal value made at the end of each period over an established length of time.

Annuity Due

A financial product that pays out a series of payments at the beginning of each period, such as monthly or annually.

Present Value

The current value of a future sum of money or stream of cash flows given a specified rate of return, commonly used to appraise long-term projects.

Discount Rate

The interest rate used to determine the present value of future cash flows in discounted cash flow analysis. It reflects the opportunity cost of capital.