The figure given below shows the demand [D and D'] and supply [S and S'] curves of shares of stock.Figure 17.2

-If the earnings of Chopo Co. are lower than expected, the forecasts will be revised downward and the price of the company's stock will decline.

Question

The figure given below shows the demand [D and D'] and supply [S and S'] curves of shares of stock.Figure 17.2
 
-If the earnings of Chopo Co. are lower than expected, the forecasts will be revised downward and the price of the company's stock will decline.

Quizplus · Accepted Answer

If the earnings of Chopo Co. are lower than expected, it will lead to a decrease in the demand for its shares. As a result, the demand curve will shift to the left from D to D', leading to a decrease in both the equilibrium price and quantity of the shares. Therefore, the price of the company's stock will decline.

The Figure Given Below Shows the Demand [D and D']