Attempts Are Being Made to Develop a Biodegradable Plastic Using

question 178

Multiple Choice

Attempts are being made to develop a biodegradable plastic using agricultural produce such as potatoes.If these attempts are successful, what will happen to the equilibrium price and quantity of potatoes?

• A)Price will increase and quantity decrease.
• B)Price will increase and quantity increase.
• C)Price will decrease and quantity increase.
• D)Price will decrease and quantity decrease.
• E)No change in equilibrium price and quantity will occur.

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Definitions:

Operating Cash Inflow

Cash received by a company during its normal business operations.

After-Tax Discount Rate

The rate used to discount future cash flows to their present value, taking into account the effects of taxes.

Straight-Line Depreciation

A method of calculating depreciation of an asset by evenly spreading its cost over the expected useful life.

After-Tax Discount Rate

The rate used to discount future cash flows to their present value after accounting for the effects of taxes, reflecting the net cost of capital to the company.