Assume That the Demand Curve for MP3 Players Shifts to the Right

question 170

Multiple Choice

Assume that the demand curve for MP3 players shifts to the right and the supply curve for MP3 players shift to the left, but the supply curve shifts less than the demand curve.As a result

• A)both the equilibrium price and quantity of MP3 players will decrease.
• B)both the equilibrium price and quantity of MP3 players will increase.
• C)the equilibrium price of MP3 players may increase or decrease; the equilibrium quantity will decrease.
• D)the equilibrium price of MP3 players will increase; the equilibrium quantity will decrease.

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Definitions:

Residual Income

The income that remains after deducting all required costs of capital from operating profits, often used to assess divisional or project performance.

Average Total Assets

A financial metric calculated by averaging a company's total assets at the beginning and end of the accounting period.

Operating Expenses

Costs associated with the day-to-day functions of a business, excluding direct production costs, such as rent, utilities, and payroll expenses.

Profit Centers

Individual departments or divisions within a company that are responsible for generating their own revenue and profits.