John Is an Athlete

question 84

Multiple Choice

John is an athlete.He has $120 to spend and wants to buy either a heart rate monitor or new running shoes.Both the heart rate monitor and running shoes cost $120,so he can only buy one.This illustrates the principle that

• A)trade can make everyone better off.
• B)people face trade-offs.
• C)rational people think at the margin.
• D)people respond to incentives.

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Definitions:

Business Combination

Represents a transaction or event where an acquirer obtains control of one or more businesses.

Journal Entry

A record in bookkeeping that logs the debit and credit aspects of a financial transaction.

Retained Earnings

The portion of a business's profits not distributed to shareholders, reinvested in the business instead.

Push-down Accounting

An accounting method applied in business combinations where the purchase price of an acquired entity is reflected in the financial statements of the acquired company.