All Shredded Wheat Producers Have Decided to Add a New

question 57

Multiple Choice

All shredded wheat producers have decided to add a new ingredient, the "crunch enhancer" to shredded wheat. Crunch enhancer keeps cereals crisper longer in milk and, as a result, consumers decide they like shredded wheat more than before. What happens to the supply and demand curves for shredded wheat now that it costs more to produce and consumers like it better?

• A)The supply and demand curves both shift rightward.
• B)The supply curve shifts rightward and the demand curve remains unchanged.
• C)The supply curve shifts leftward and the demand curve shifts rightward.
• D)The supply curve shifts leftward and the demand curve remains unchanged.
• E)Neither curve changes but a movement occurs up along the demand curve and a movement occurs up along the supply curve.

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Definitions:

Proportionate Interest Goodwill Method

An accounting method used to calculate goodwill in the consolidation of financial statements, based on the parent company's proportionate share in the net assets of the subsidiary.

Goodwill Impairment Losses

are losses recognized when the carrying amount of goodwill exceeds its recoverable amount.

Indirect NCI

Refers to a non-controlling interest in an entity that is owned through another subsidiary rather than directly.

Allocation of the Dividend

The process of distributing a portion of a company's earnings, decided by the board of directors, to its shareholders in proportion to their shareholding.