-Using the Above Figure, Suppose That Roses Are a Normal

question 357

Multiple Choice

-Using the above figure, suppose that roses are a normal good. If there is an increase in income,

• A) the equilibrium price will rise above $25 per dozen roses.
• B) we cannot predict what will happen to the equilibrium price.
• C) we cannot predict what will happen to the equilibrium quantity.
• D) the equilibrium quantity will decrease below 10 dozen roses.

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Definitions:

Sales Discounts

Reductions in the amount due from a customer, offered as an incentive for early payment according to the sales terms.

Sales Returns

Transactions where customers return previously purchased merchandise, leading to a reversal of revenue.

Cost of Goods Sold

The specific costs incurred in the production of a company's sold merchandise.

Gross Margin Ratio

A measure of a company's financial health, calculated as gross profit divided by net sales, showing the percentage of sales revenue that exceeds the cost of goods sold.