An Example of a Good That Likely Has an Income

question 40

Multiple Choice

An example of a good that likely has an income elasticity less than one is _____, while an example of a good that likely has an income elasticity greater than one is _____.

• A) coffee; sailboats
• B) sailboats; cars
• C) vacations; cell phones
• D) filet mignon; chicken

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Definitions:

Financing Activities

Transactions involving changes in equity and long-term liabilities on the balance sheet, reflective of how a company raises capital and repays its investors.

Amortization

Amortization is the process of gradually writing off the initial cost of an intangible asset over its useful life, reflecting its consumption or expiration.

Straight-Line Amortization

An alternative method of amortizing bond discounts and premiums that allocates an equal dollar amount to each interest period. It is only permitted by GAAP under specific circumstances.

Bond Payable

A long-term liability representing money owed by a company to bondholders, to be repaid at a certain date.