Pencil Lead Is Composed of Pure Carbon, and Pencil Lead

question 48

Multiple Choice

Pencil lead is composed of pure carbon, and pencil lead is very cheap. Diamonds, like pencil lead, are composed of pure carbon. Therefore, probably diamonds are very cheap.

• A) Deductive, invalid.
• B) Inductive, strong.
• C) Deductive, valid.
• D) Inductive, sound.
• E) Inductive, weak.

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Definitions:

Fixed Cost

are business expenses that remain constant regardless of the level of production or sales, such as rent or salaries.

Depreciation

The process of allocating the cost of tangible assets over their useful lives, reflecting wear and tear or obsolescence.

Discount Rate

The interest rate used to discount future cash flows to their present value, reflecting the time value of money.

Operating Leverage

A measure of how sensitive a company's operating income is to a change in its sales volume.