The Incentive Function of Prices

question 193

Multiple Choice

The incentive function of prices

• A)indicates that price increases bring forth more of that resource.
• B)is the idea that competitive markets will always clear.
• C)applies to all resources.
• D)only applies to land.

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Definitions:

Allowance Method

An accounting technique used to estimate and prepare for the amount of accounts receivable that may not be collectible.

Uncollectible Accounts

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

Accounting Convention

Accepted accounting principles that guide the reporting and financial presentation of a company's accounts.

Qualitative Characteristics

Attributes that enhance the usefulness of financial information, including understandability, relevance, reliability, and comparability.