Scenario 7-1 Use the Information Below to Answer the Following Question(s)

question 112

Multiple Choice

Scenario 7-1
Use the information below to answer the following question(s) .
JoAnn considers cola and plain sparkling water to be good substitutes.Suppose the price of sugar,a key ingredient used to produce cola,falls.
-Refer to Scenario 7-1.According to the substitution effect,which of the following is most likely to occur?

• A)JoAnn will purchase less cola and more sparkling water.
• B)JoAnn will purchase more cola and less sparkling water.
• C)JoAnn will purchase more of all goods due to her higher real income.
• D)JoAnn's demand curve will decrease (shift in),causing her to purchase less cola.

Analyze performance using the balanced scorecard.

Calculate departmental income and gross profit for divisions.

Understand the concept of residual income and how it is calculated for divisions.

Comprehend the principles behind transfer pricing and how it affects divisional sales and purchases.