An Increase in Demand for a Product and a Reduction

question 76

Multiple Choice

An increase in demand for a product and a reduction in the costs of production would:

• A)​increase the equilibrium quantity and increase the equilibrium price.
• B)​increase the equilibrium quantity and decrease the equilibrium price.
• C)​increase the equilibrium quantity and cause an indeterminate change in the equilibrium price.
• D)​decrease the equilibrium quantity and cause an indeterminate change in the equilibrium price.

---

Definitions:

Net Present Value Method

A method used in capital budgeting to evaluate the profitability of an investment or project by calculating the difference between the present value of cash inflows and outflows.

Time Value of Money Concept

The principle that a dollar today is worth more than a dollar in the future due to its potential earning capacity.

Capital Investment Analysis

The process of evaluating and comparing potential investments or projects based on their expected returns and risks to choose the most beneficial.

Sunk Costs

Sunk costs refer to money that has already been spent and cannot be recovered, a concept that emphasizes that such costs should not affect future business decisions.