Property Insurance Companies Protect Themselves Against the Extensive Damage Caused

question 31

Multiple Choice

Property insurance companies protect themselves against the extensive damage caused by hurricanes and earthquakes by:

• A)Selling thousands of polices to different homeowners.
• B)Factoring the cost into the price of the policies.
• C)Buying reinsurance against such catastrophes.
• D)Declaring bankruptcy when the need arises.

Identify factors affecting price elasticity of supply and demand.

Determine the effect of income changes on the demand for goods (normal and inferior goods).

Understand the concept and calculation of cross elasticity of demand.

Apply the midpoint formula to calculate elasticity.

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Definitions:

Adjusting Entry

A journal entry made at the end of an accounting period to allocate income and expenditure to the appropriate period.

Inventory Supplies

Items or materials kept on hand by a business for the production process or for sale.

Unearned Revenue

Money received by a business for goods or services yet to be provided, recorded as a liability until earned.

Liability Account

An accounting record that shows the current and future financial obligations a company owes to others.