File-Sharing Programs Such as Napster,Kazaa,and IMesh Make It Possible for Individuals

question 22

Multiple Choice

File-sharing programs such as Napster,Kazaa,and iMesh make it possible for individuals to exchange music files over the Internet.All else constant,which of the following statements best describes how the development of these programs has affected the retail market for new music CDs?

• A)Demand for CDs has decreased, causing equilibrium price and quantity to decrease.
• B)Demand for CDs has increased, causing equilibrium price and quantity to increase.
• C)Demand for CDs has decreased, causing equilibrium price to decrease and equilibrium quantity to increase.
• D)Demand for CDs has increased, causing equilibrium price to increase and equilibrium quantity to decrease.

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Definitions:

Business Combinations

The uniting of separate companies, assets, or entities into one through various types of financial transactions, including mergers and acquisitions.

Journal Entry

A record in accounting that notes a specific financial transaction in a company's books, involving debits and credits to various accounts.

Elimination Entry

An accounting entry made to remove the effects of intra-company transactions when consolidating the financial statements of a parent and its subsidiaries.

Fair Value

The earnings from auctioning off an asset or the obligation incurred during a methodical marketplace exchange at the date of price setting.