Assume That Cotton Is a Normal Good

question 81

Multiple Choice

Assume that cotton is a normal good.Which of the following would cause both the equilibrium price and equilibrium quantity of cotton to increase?

• A)an increase in consumer income
• B)a drought that sharply reduces cotton output
• C)a decrease in consumer income
• D)unusually good weather that results in a bumper crop of cotton

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Definitions:

FIFO vs. LIFO

Accounting methods for valuing inventory; First In, First Out (FIFO) and Last In, First Out (LIFO) affect the cost of goods sold and inventory valuation.

Economic Value Added

A measure of a company's financial performance based on the residual wealth calculated by deducting cost of capital from its operating profit.

Cost of Debt

The effective rate that a company pays on its current debt.

Prospective Capacity

Refers to the expected or future ability of a company or economy to produce goods or services.