Table 22-1 Three Longtime Friends-Sam, Diane, and Cliff-Are Deciding How They Will

question 10

Multiple Choice

Table 22-1
Three longtime friends-Sam, Diane, and Cliff-are deciding how they will spend their Saturday evening. They all agree that they should do one of three things: go to a movie, go to a concert, or go out to dinner. They also agree that they will have two pairwise votes to determine how to spend their evening, with the majority determining the outcome on each vote. The first, second, and third choices for each person are as indicated in the table below.

-Refer to Table 22-1.If (1) the first vote pits "dinner" against "concert," and (2) the second vote pits "movie" against the winner of the first vote,then

• A)"Dinner" wins the first vote and "dinner" wins the second vote, so they go to dinner.
• B)"Dinner" wins the first vote and "movie" wins the second vote, so they go to a movie.
• C)"Concert" wins the first vote and "concert" wins the second vote, so they go to a concert.
• D)"Concert" wins the first vote and "movie" wins the second vote, so they go to a movie.

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Definitions:

Cash Ratio

A liquidity ratio that measures a company's ability to cover its short-term liabilities with its cash and cash equivalents.

Cash Equivalents

Short-term, highly liquid investments that are readily convertible to known amounts of cash and are subject to insignificant risk of changes in value.

Current Liabilities

Current liabilities are a company's debts or obligations that are due to be paid to creditors within one year.

Long-term Debt

Debt obligations that are due for repayment in more than one year, often used by businesses to finance operations or acquisitions.