Refer to the Accompanying Figure

question 153

Multiple Choice

Refer to the accompanying figure. Suppose the solid line shows the current demand curve for coffee. In response to an announcement that much of next year's coffee crop has been destroyed by a storm in Brazil, you should expect:

• A)an increase in the quantity of coffee demanded, but no shift in the demand curve.
• B)the demand curve to shift to D(A)in anticipation of higher future prices.
• C)the demand curve to shift to D(
• B)in anticipation of higher future prices.
• D)neither a change in quantity demanded nor a shift in demand because next year's coffee crop will not affect the current demand for coffee.

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Definitions:

Depreciation Expense

The allocated portion of the cost of a tangible or physical asset that is written off as an expense over its useful life.

Revised Amounts

Adjusted figures in financial statements or budgets to reflect changes from previously reported or estimated numbers.

Straight-Line Method

A method of calculating depreciation for an asset, spreading the cost evenly over its useful life.

Depreciation Expense

It is an accounting method of allocating the cost of a tangible asset over its useful life.