An Individual Derives Utility from Games,g (Y-Axis),and Toy Airplanes,a (X-Axis),described

question 71

Multiple Choice

An individual derives utility from games,g (y-axis) ,and toy airplanes,a (x-axis) ,described by the utility function U(g,a) = g^0.6a^0.4.The price per game is $20 and the price of toy airplanes is $10.Using the slope of the income consumption curve (ICC) ,determine whether games and toy airplanes are normal or inferior goods when income increases from $100 to $200.

• A) Both goods are normal goods with an ICC slope of .
• B) Both goods are normal goods with an ICC slope of .
• C) Both goods are inferior goods with an ICC slope of - .
• D) Both goods are inferior goods with an ICC slope of - .

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Definitions:

Closing Entries

Journal entries made at the end of an accounting period to transfer the balances of temporary accounts to permanent accounts and prepare the company’s books for the next period.

Perpetual Inventory System

An approach to inventory management where updates to inventory records are made in real-time after each purchase, sale, or return transaction.

Shrinkage

The loss of inventory that can occur due to theft, damage, or errors in a company's stock.

Adjusting Entries

Journal entries made at the end of an accounting period to update account balances before preparing financial statements.