Use the Following to Answer Question 70

question 131

Multiple Choice

Use the following to answer question 70:
Figure: Water and Electricity 2
-(Figure: Water and Electricity 2) Refer to the figure. If the price of electricity changed and the price of water stayed the same, causing the change in the budget constraint as indicated by the dashed line, did an income effect play a role in the change in this person's consumption bundle?

• A) No, because the new consumption point is on the same indifference curve.
• B) No, because the new consumption point has less water, not more.
• C) Yes, because there was a change in relative prices.
• D) Yes, because after keeping utility constant this person still buys more electricity.

---

Definitions:

Depreciable Cost

The cost of a plant asset less its salvage value.

Remaining Useful Life

The expected period that an asset is anticipated to be functional and economically viable for use in operations.

Book Value

The value of a company's asset as it appears on the balance sheet, calculated by subtracting the asset's accumulated depreciation from its cost.

Fair Market Value

The price at which an asset would sell in the market under conditions of fair competition and sufficient information.