Suppose the Cost of Breaking the Law Is Imposed on the Sellers

question 112

Multiple Choice

Suppose the cost of breaking the law is imposed on the sellers of an illegal good.This action will have its biggest impact on quantity if the demand for the good is

• A)inelastic or the supply is inelastic.
• B)elastic or the supply is elastic.
• C)elastic or the supply is inelastic.
• D)inelastic or the supply is elastic.
• E)perfectly inelastic.

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Definitions:

Percentage of Receivables Method

An accounting method used to estimate the amount of a company's accounts receivable that will not be collected.

Bad Debt Write-offs

The process of removing uncollectable accounts receivable from the accounting records, recognizing them as a loss.

Allowance Method

An accounting technique that estimates and records bad debts expense from credit sales.

Bad Debt Expense

An expense account representing accounts receivable that a company does not expect to collect and writes off as a loss.