If the Price of Pizzas Has Risen from $4 to $5

question 175

Multiple Choice

If the price of pizzas has risen from $4 to $5 at the same time that the price of an hour of spinning class has risen from $20 to $30, then

• A)pizzas have become relatively more expensive.
• B)spinning classes have become relatively more expensive.
• C)the relative prices of pizzas and spinning classes have remained constant.
• D)workers' real income must have decreased.

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Definitions:

Residual Income

The amount of income that an individual or company retains after deducting all expenses and cost of capital, including debt and equity costs.

Managerial Performance

Assessment of the effectiveness and efficiency of managers in achieving business objectives, often evaluated through financial and non-financial metrics.

Residual Income

The income that exceeds the required return on investment or minimum acceptable rate of return set by management.

Corporate Minimum Required Rate of Return

The lowest acceptable rate of return on an investment that a corporation deems sufficient for its operations and growth.