Which of the Following Most Clearly Illustrates the Concept of "Derived

question 105

Multiple Choice

Which of the following most clearly illustrates the concept of "derived demand"?

• A) An increase in the price of steak causes the demand for poultry to increase.
• B) An increase in the demand for new houses leads to an increase in the demand for construction workers.
• C) An increase in consumer income leads to an increase in the demand for services provided by the government.
• D) An increase in the demand for new cars causes the demand for used automobiles to rise.

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Definitions:

Reported

Refers to information or data that has been officially announced or presented.

Matching Principle

An accounting principle that states expenses should be recognized in the same period as the revenue they helped generate.

Recorded

The act of entering financial transactions or information into accounting records.

Adjusting Entries

Entries made in the accounting records at the end of an accounting period to allocate incomes and expenses to the period in which they actually occurred.