Suppose That a New Drug Has Been Approved to Treat

question 74

Multiple Choice

Suppose that a new drug has been approved to treat a life-threatening disease. The demand for that drug is shown on the graph below. Prior to approval of this drug, the only treatment for this condition was any one of several non-prescription, or over-the-counter, pain relievers. The demand for one brand of the several non-prescription pain relievers is also shown on the graph. A likely reason for the difference in the slopes of the demand curves is that:

• A)the over-the-counter pain reliever has many substitutes, but the new drug does not.
• B)one drug is new on the market, but the other has been available for a long time.
• C)one drug is heavily regulated by the Food and Drug Administration and the other is not.
• D)one market is in equilibrium and the other is not.

Identify the correct treatment of dishonored notes receivable.

Understand the valuation and reporting of short-term notes receivable.

Calculate and interpret the accounts receivable turnover.

Compare and contrast the GAAP and IFRS treatment of factoring transactions.

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Definitions:

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a given price, holding all else constant.

Consumer Price Index

A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care, typically used to assess inflation.

Inflation Rate

The growth rate in the common price range for goods and services, downgrading the practical purchasing scope.

Money Supply

The aggregate financial assets at a specific time in an economy.