Suppose the Price of Soda Is $2 Each and the Price

question 9

Multiple Choice

Suppose the price of soda is $2 each and the price of a pizza slice is $4 each. David maximizes his utility by buying only sodas and pizza. He buys 5 sodas and 10 slices of pizza. If the price of a soda increases to $3 each, David will

• A) decrease the number of sodas bought and the demand curve for sodas will shift leftward.
• B) decrease the number of sodas bought and move along the demand curve for soda.
• C) buy more pizza and move along the demand curve for pizza.
• D) buy less pizza and the demand curve for pizza will shift leftward.

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Definitions:

Canadian GAAP

Generally Accepted Accounting Principles in Canada, a set of standards and procedures that companies must follow in their financial reporting.

CPA Canada Handbook

A comprehensive guide that includes standards and guidelines for financial and management accounting practices in Canada.

Debt-to-Equity Ratio

A financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets.

Solvency

The ability of an entity to meet its long-term financial obligations and continue its operations into the foreseeable future.