Question

Mixster Concrete Company is considering buying a new cement truck. The owners and their accountants decide that this is the profitable thing to do. Before they can buy the truck, the interest rate and price of trucks change. In which case do these changes both make them less likely to buy the truck?a. Interest rates rise and truck prices rise.b. Interest rates fall and truck prices rise.c. Interest rates rise and truck prices fall.d. Interest rates fall and truck prices fall.

Answer 1

a. Interest rates rise and truck prices rise.

Step-by-step explanation:

Mixster Concrete Company are less likely to buy the truck if the interest rates rise and truck prices rise.

An increase in the interest rate means they would be paying more on the principal amount borrowed from any financial institution, thereby increasing their overhead costs.

Also, the sudden change in truck prices as against the initial rate would cause them not to buy so as not to have a budget deficit.

Answer 2

interest rates rise and truck prices rise.

Step-by-step explanation:

When making a purchase businesses want to go for the best deal they can get at the lowest price.

In making the purchase of the truck if interest rate rises it means that the cost of borrowing money has increased. The business will incur higher cost to obtain funds to buy the truck so this will discourage them from buying.

Also when the price of the truck rises above previous expectation, the business is less likely to buy the truck because the increased cost will negatively affect the business bottom line.