Table 5-1
Suppose a Coffee Shop Faces the Following Demand

question 115

Multiple Choice

Table 5-1
Suppose a coffee shop faces the following demand schedule for coffee. $\begin{array}{|c|c|}\hline \text { Price per coffee (\$) } & \text { Quantity demanded } \\\hline 4.00 & 200 \\\hline 3.00 & 600 \\\hline 2.50 & 800 \\\hline 2.00 & 1000 \\\hline 1.50 & 1200 \\\hline 1.00 & 1400 \\\hline\end{array}$
-Referring to Table 5-1, comparing the sales at $1.00 and $3.00, which of the statements below is true?

• A)the price elasticity of demand is higher at $3.00 than $1.00
• B)the price elasticity of demand is lower at $3.00 than at $1.00
• C)the price elasticity of demand is the same at both prices
• D)the price elasticity of demand at $3.00 is zero

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Definitions:

Bad Debts Expense

An expense account reflecting the cost of accounts receivable that a company does not expect to collect, typically due to customers' inability to pay.

General Journal Entries

Records of financial transactions in the general journal, documenting the details of business transactions and their impact on the accounts.

Allowance Method

An accounting technique used to estimate the amount of bad debts that will not be collected from customers.

Note Receivable

A financial asset representing a promise to receive a specific amount of money at one or more future dates, typically a formal loan to another entity.