The Demand and Supply of Pickles Are Given by Q^D

question 83

Multiple Choice

The demand and supply of pickles are given by Q^D = 300 - 500P and Q^S = 400P - 150, where P is the price per pickle and Q measures the quantity of pickles in millions. Suppose the government creates a subsidy of $0.25 per pickle. Which of the following statements are TRUE?

• A) II, III, and IV
• B) I and III
• C) II and IV
• D) I, III, and IV

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Definitions:

Direct Write-off Method

An accounting method where uncollectible debts are charged directly to expense as they are deemed to be uncollectible, not matching expenses to related revenues.

Allowance Method

An accounting technique that estimates and accounts for bad debts or credit losses in financial statements.

Uncollectible Receivables

Accounts receivable that a company does not expect to collect and writes off as a loss.

Credit Sales

Sales transactions where the payment is deferred to a future date, typically resulting in the creation of accounts receivable.