"As the Price of Personal Computers Continues to Fall, Demand

question 118

Multiple Choice

"As the price of personal computers continues to fall, demand increases." This headline is inaccurate because:

• A)a change in the price of personal computers shifts the demand curve.
• B)a change in the price of personal computers shifts the supply curve.
• C)the statement is backwards: increased demand leads to lower prices.
• D)a falling price for personal computers increases quantity demanded, not demand.

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Definitions:

Sales Commissions

A form of compensation to salespersons for their sales achievements, usually calculated as a percentage of the sales they generate.

Net-of-Tax Basis

A method of presenting financial figures after the effect of taxes has been considered or deducted.

Depreciable Equipment

Tangible assets, such as machinery or hardware, acquired for use in operations, which lose value over time due to usage, wear and tear, or obsolescence and can be depreciated.

Prior-Period Adjustment

Corrections of errors made in previously published financial statements, not considered ordinary adjustments.