Drive with Us is an automobile retailer and pays floor plan financing to finance the cars they hold in inventory. If the interest rate on their floor plan financing increases from 4 to 5 percent, Drive with Us's expected marginal cost from holding additional cars in inventory will shift ________ and the profit-maximizing number of cars to hold in inventory will ________.
A) downward; increase
B) upward; increase
C) upward; decrease
D) downward; decrease
C) upward; decrease
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If supply of a product increases and demand for the product decreases, equilibrium price will definitely change
Indicate whether the statement is true or false
A prolonged recession in Europe should decrease the
a. supply of U.S. dollars. b. demand for U.S. dollars. c. supply of U.S. goods and services. d. demand by Americans for euros.
If Max's demand for hot dogs falls as his income rises, then for Max hot dogs are
A) a bad good. B) an inferior good. C) a preferential good. D) a normal good. E) a neutral good.
A seller's verbal assurance that a used car is a plum (high-quality car):
A. is not effective at reducing the problems associated with asymmetric information. B. is an effective way for sellers to prove that the good they are selling is of high quality. C. is a more efficient way to prove high quality than a money-back guarantee because it does not cost the seller any money to make the assurance. D. provides the same protection against adverse selection than does a repair guarantee.