Figure 3-6 In Figure 3-6, Suppose D ₁ and S ₁ Indicate

question 8

Multiple Choice

Figure 3-6
In Figure 3-6, suppose D ₁ and S ₁ indicate initial conditions in the market for ice cream. Which of the following changes would tend to cause a shift from S ₁ to S ₂ in the market for ice cream?

• A) an increase in the price of sugar, an ingredient used to produce ice cream
• B) a decrease in the price of frozen yogurt, a substitute for ice cream
• C) abnormally hot weather that temporarily increases consumer desire for ice cream
• D) a decrease in the price of milk, an ingredient used to produce ice cream

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Definitions:

Straight-Line Depreciation

A method of allocating the cost of a tangible asset over its useful life in equal annual amounts, representing the asset's expense.

Capital Lease

A lease agreement that is considered a purchase of the asset for accounting purposes because it transfers substantially all risks and rewards of ownership to the lessee.

Ordinary Gain

A profit resulting from business operations or the sale of assets, excluding extraordinary items and discontinued operations.

Extraordinary Gain

A gain resulting from events or transactions that are both unusual in nature and infrequent in occurrence, separated from regular business operations.