Suppose You Have $100 to Spend on Two Goods: Computer

question 52

Multiple Choice

Suppose you have $100 to spend on two goods: computer games, which cost $25 each, and audiobooks, which cost $10 each. The combination of two computer games and four audiobooks would fall

• A) inside the budget line.
• B) on the budget line.
• C) outside the budget line.
• D) cannot be determined based on the information.

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Definitions:

Accrual System

An accounting method where revenue and expenses are recorded when they are earned or incurred, regardless of when cash is exchanged.

Revenue

The complete sum of earnings derived from selling goods or offering services that are central to a company's core business.

Net Sales

The total revenue from sales less returns, allowances, and discounts.

Cost of Goods Sold

The straightforward costs related to the production of goods a company distributes, encompassing materials and labor expenses.