In General, a "Big Ticket Item" Such as a House

question 128

Multiple Choice

In general, a "big ticket item" such as a house or new car will

• A)tend to have a more elastic demand than a lower-priced good.
• B)tend to have an inelastic demand because spending on the item takes up a large share of the average consumer's budget.
• C)tend to have an inelastic demand because it has many substitutes.
• D)tend to have a more inelastic demand the more time that passes.

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Definitions:

Reversing Temporary Difference

An accounting adjustment that reverses differences between tax and financial reporting over time.

Originating Temporary Difference

A difference that arises in a particular period between the book income and taxable income, which is expected to reverse in the future.

Municipal Bonds

Debt securities issued by municipalities or local governments to finance public projects, typically offering tax-exempt interest payments to investors.

Permanent Difference

Refers to the discrepancy between book income and tax income that arises from certain items being recognized in either financial accounting or tax accounting, but not in both, leading to a difference that does not reverse over time.