Suppose Prices for New Homes Have Risen and Sales of New

question 145

Multiple Choice

Suppose prices for new homes have risen and sales of new homes have also risen. We can conclude that

• A) the demand for new homes has risen.
• B) the law of demand has been violated.
• C) new firms have entered the construction industry.
• D) construction firms must be facing higher costs.

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Definitions:

Drawing and Capital Accounts

These refer to accounts used in partnerships and sole proprietorships where the 'drawing account' tracks withdrawals made by the owner(s) for personal use, and the 'capital account' tracks the owner's invested equity and retained earnings in the business.

Sole Proprietorship

A sole proprietorship is a business owned and operated by a single individual, where there is no legal distinction between the owner and the business entity.

Distribution of Cash

The process of allocating cash dividends to shareholders based on the number of shares held.

Income-Sharing Ratio

The proportion at which partners in a partnership agreement divide profits and losses among themselves.