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The Following Two Graphs Depict the Equilibrium Price of a Pound

question 113

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The following two graphs depict the equilibrium price of a pound of grapes in California and West Virginia, respectively. Assume the type and quality of the grapes being sold in the two states are identical. Further, assume grape sellers incur zero costs to transport grapes between the two states and there are no other barriers to trade. Use these graphs to answer the following questions. The following two graphs depict the equilibrium price of a pound of grapes in California and West Virginia, respectively. Assume the type and quality of the grapes being sold in the two states are identical. Further, assume grape sellers incur zero costs to transport grapes between the two states and there are no other barriers to trade. Use these graphs to answer the following questions.   -Which of the following pairs of prices is consistent with the law of one price? A)  California price: $0.50; West Virginia price: $0.80 B)  California price: $0.80; West Virginia price: $0.80 C)  California price: $1.20; West Virginia price: $1.20 D)  California price: $1.35; West Virginia price: $1.35 E)  California price: $1.50; West Virginia price: $1.50
-Which of the following pairs of prices is consistent with the law of one price?


Definitions:

Accounts Receivable Turnover

This metric calculates how many times a business can turn its accounts receivable into cash during a certain period, indicating the efficiency of credit and collection policies.

Average Collection Period

The average number of days it takes for a business to receive payments owed by its customers for goods or services sold on credit.

Allowance for Doubtful Accounts

An estimation of accounts receivable that a company does not expect to collect, appearing as a contra-asset account on the balance sheet.

Net Credit Sales

The net income generated from credit sales after subtracting any returns or allowances.

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