Use the Following to Answer Questions

question 41

Multiple Choice

Use the following to answer questions .
Exhibit: Supply and Demand in Agriculture
-(Exhibit: Supply and Demand in Agriculture) If a price floor at P₄ is set to help farmers in terms of income and government wants to assure farmers that their output will be purchased, the government would have to purchase an amount of output equal to:

• A) Q₃ - Q₀.
• B) Q₃ - Q₁.
• C) Q₂ - Q₁.
• D) none of the above are correct.

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Definitions:

Net Realizable Value

The estimated selling price of goods minus the cost of their sale or disposal.

Direct Write-off Method

A method of accounting for bad debts that charges the amount directly to expense when it is determined to be uncollectible.

Allowance Account

An accounting reserve set up to account for future adjustments such as bad debts or product returns.

Direct Write-off Method

An accounting method where uncollectible accounts receivable are directly written off against income at the time they are deemed non-collectable.