Suppose that the government finds a major defect in one of a company's products and demands that it be taken off the market. What would we expect?
A) The supply of the stock and the price will both rise.
B) The supply of the stock and the price will both fall.
C) The demand for the stock and the price will both rise.
D) The demand for the stock and the price will both fall.

Question

Quizplus · Accepted Answer

When a government finds a major defect in a company's product and demands its removal from the market, it typically leads to a loss of consumer confidence and potential financial losses for the company. This situation would likely cause investors to sell their shares, leading to a decrease in demand for the stock. As demand falls, the price of the stock is also expected to decrease.

Suppose That the Government Finds a Major Defect in One