In the Specific Factors Model,a 5% Decrease in the Price

question 62

Multiple Choice

In the specific factors model,a 5% decrease in the price of food accompanied by a 5% decrease in the price of cloth will cause ________ in the welfare of labor,________ in the welfare of the fixed factor in the production of food,and ________ in the welfare of the fixed factor in the production of cloth.

• A) no change; no change; no change
• B) an increase; an increase; an increase
• C) a decrease; an increase; an increase
• D) an increase; a decrease; a decrease
• E) a decrease; a decrease; a decrease

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Definitions:

Allowance Account

An account used to offset the gross accounts receivable by the amount estimated to be uncollectible.

Accounts Receivable

Unsettled payments from customers to a business for goods delivered or services carried out.

Note Receivable

A financial asset representing a promise for future receipt of cash, typically arising from sales or loans, evidenced by a written promise to pay.

Account Receivable

Deferred payments from customers for the delivery or use of goods or services by a company.