If the Price of a Good Rises,then the Effect on the Income

question 17

Multiple Choice

If the price of a good rises,then the effect on the income of the factors that are used intensively in its production will be

• A)to raise income by an absolute amount that is less than the rise in prices.
• B)to raise income by an absolute amount that is more than the rise in prices.
• C)to raise income by a smaller percentage than the rise in prices.
• D)to raise income by a greater percentage than the rise in prices.

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Definitions:

Act of Nature

Natural events outside of human control, such as earthquakes, floods, or hurricanes, that can cause damage or affect contracts and liabilities.

Fair Value

An estimate of the market value of an asset or liability, based on current prices in an orderly transaction between market participants.

Book Value

Book value is the value of an asset according to its balance sheet account balance, taking into account the cost of the asset minus any depreciation, amortization, or impairment costs.

Loss on Disposal

An expense recorded when an asset is sold for less than its carrying amount on the balance sheet.