Which of the Following Statements About Prices and Profit Is

question 85

Multiple Choice

Which of the following statements about prices and profit is true?

• A)Higher prices always lead to lower profits because fewer units will be sold.
• B)Higher prices always lead to lower demand and higher profits.
• C)Higher prices combine with lower demand to change the level of profits.
• D)Higher prices will be offset by lower demand so profits will stay constant.

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Definitions:

Depletion Expense

An accounting approach to allocate the cost of extracting natural resources, such as minerals or timber, over the period those resources are consumed.

Straight-line Method

A method of calculating depreciation whereby an asset's cost is evenly spread over its useful life.

Salvage Value

The estimated residual value of an asset at the end of its useful life, often considered for depreciation calculations.

Useful Life

The estimated duration a fixed asset is expected to be economically usable, with normal repairs and maintenance, for it to generate revenue.