Assume That the Market for Pencils Is in Equilibrium and That

question 62

Multiple Choice

Assume that the market for pencils is in equilibrium and that demand is very price elastic. The popularity of digital tablets and electronic pens increases and demand for pencils declines. The equilibrium change in quantity demanded is:

• A) 0 (zero).
• B) relatively small.
• C) proportional to the shift in demand.
• D) relatively large.
• E) infinite.

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Definitions:

UCC

An all-encompassing body of laws, known as the Uniform Commercial Code, administers the conduct of commercial transactions throughout the United States.

Secured Transactions

A financial arrangement where the borrower guarantees the repayment of a debt by giving the lender a security interest in certain assets as collateral.

Security Interest

A legal claim or right granted by a debtor to a creditor over the debtor's property, securing the payment of a debt or performance of some other obligation.

Collateral

An asset offered by a borrower to secure a loan or other credit, which the lender can seize if the loan is not repaid.