Figure 9-5 -Refer to Figure 9-5.The Horizontal Line at the World Price

question 353

Multiple Choice

Figure 9-5

-Refer to Figure 9-5.The horizontal line at the world price of wagons represents the

• A) demand for wagons from the rest of the world.
• B) supply of wagons from the rest of the world.
• C) level of inefficiency in the domestic market caused by trade.
• D) surplus in the domestic wagon market.

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Definitions:

Investment Center

A segment or area of a business responsible for its own revenue, expenses, and assets, and its performance is measured by its return on investment.

Fixed Expenses

These are costs that do not change with the level of production or sales, such as rent, salaries, and insurance.

Return On Investment

A measure used to evaluate the efficiency of an investment or compare the efficiencies of several different investments.

Residual Income

The amount of income that an entity has after all costs and expenses, including the cost of capital, have been deducted.