Exhibit 5-9 -Refer to Exhibit 5-9. When Price Falls from P₂ to from P₂

question 35

Multiple Choice

Exhibit 5-9
-Refer to Exhibit 5-9. When price falls from P₂ to P₁, the size of consumer surplus

• A)increases by area 2.
• B)decreases by area 2.
• C)remains the same.
• D)increases by areas 1 + 2.
• E)decreases by areas 1 + 2.

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Definitions:

Expense Account Balance

The total amount recorded as expenditures by a company within a specific period, awaiting reimbursement or allocation.

Income Summary

A temporary account used in accounting to transfer revenues and expenses, summarizing the net income or loss for a period before transferring the balance to retained earnings.

Owner's Capital

The amount of equity in a company that is directly attributable to the owner(s), representing their stake in the company’s assets after liabilities have been subtracted.

Revenue

Income derived from the core business activities of a company, specifically through selling products or services.