When a Good Is Normal

question 36

Multiple Choice

When a good is normal:

• A) an increase in income raises consumption at each price, so the demand curve shifts to the left.
• B) an increase in income raises consumption at each price, so the demand curve shifts to the right.
• C) a decrease in income lowers consumption at each price, so the demand curve shifts to the right.
• D) an increase in income lowers consumption at each price, so the demand curve shifts to the left.

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Definitions:

Bad Debts Expense

The amount of receivables that a company does not expect to collect and thus writes off as a loss in its accounting records.

Accounts Receivable Turnover

A financial ratio indicating how many times a company's accounts receivable are collected during a specific period.

Comparative Balance Sheets

Financial statements that present the financial position of a company at different points in time, side by side, to facilitate comparison.

Allowance Method

An accounting technique used to estimate and record bad debts expense by anticipating uncollectible accounts.