Consider the Following Equations for the Demand for Good A,where

question 85

Multiple Choice

Consider the following equations for the demand for good A,where Q_A denotes quantity demanded,P_A denotes price,and M denotes income: 1.Q_A = 120 + 3.5 P_A + 14M
2.Q_A = 120 - 3.5 P_A + 14M
3.Q_A = 120 - 3.5 P_A - 14M
Which of these equations represents a downward-sloping demand curve for a normal good?

• A)1 only
• B)2 only
• C)3 only
• D)1 and 2
• E)none of the equations

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Definitions:

Salvage Value

The estimated residual value of an asset at the end of its useful life.

Useful Life

The estimated time period that an asset is expected to be used before it is fully depreciated or deemed no longer useful.

Depreciation Expense

An accounting method of allocating the cost of a tangible asset over its useful life to reflect its decrease in value over time.

GAAP

Stands for Generally Accepted Accounting Principles, which are a common set of accounting standards and procedures that companies must follow when they compile their financial statements.