If Income Increases One Percent, and Demand Increases Five Percent

question 60

Multiple Choice

If income increases one percent, and demand increases five percent, then the price elasticity of the good is:

• A) Inelastic
• B) Elastic
• C) Unitary elastic
• D) Not enough information to know

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Definitions:

Correcting Entry

A journal entry made to amend an error in the financial statements.

Closing Entry

Entries recorded at the conclusion of an accounting period for the purpose of shifting balances from temporary accounts to permanent ones.

Balance Sheet Account

An account displayed on the balance sheet, which includes assets, liabilities, and equity accounts, representing a snapshot of a company's financial position at a specific point in time.

Accounting Cycle

The collective process of recording and processing the accounting events of a company, from the initial transaction to the preparation of financial statements.