Rock Bottom Gold Company recently repurchased 7 million shares of its common stock for $47 per share. The intent of the repurchase was to increase earnings per share to be more in line with competitors. Required: 1. Determine the impact of the stock repurchase on assets, liabilities, and stockholders' equity. (Enter your answers in whole dollars not in millions (i.e., 1,000,000 not 1.0). Negative amounts should be indicated by a minus sign.)

The impact includes Assets = -$32,90,00,000, Liabilities = No Effect and Stockholder's Equity = -$32,90,00,000.

If the stock is repurchased, the cash will be paid. Thus, the assets would be decreased.

Also for the stock repurchase, the stockholder's equity will be decreased consequently.

Assets = Cash (7,000,000*$47)

Assets = -$329,000,000

Thus, the assets will decrease by $329,000,000.

Liabilities = No Effect

Thus, the liabilities will have no impact for the transaction.

Stockholder's Equity = -$329,000,000

Thus, the stockholder's equity will be decreased by $329,000,000.

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It helps consumers tell producers when prices are too high.

Explanation:

The law of demand explains the relationship between price and quantity demanded. According to the law, an increase in price results in decline in demand. In other words,  there is an indirect relationship between quantity demanded and price.

When the price is set at a high level, demand tends to decline.  Only a few customers can afford to pay the price as quoted. If the price is reduced, the demand tends to rise. Sales volume can communicate to suppliers whether the price is right, low, or too high. A decrease in sales is an indication that the set price is high.