The First Time Michel Tasted Coffee,he Thought It Was Bitter

question 88

Multiple Choice

The first time Michel tasted coffee,he thought it was bitter and bad-tasting.The second time Michel had coffee,he thought that it was barely tolerable.Eventually,Michel started to enjoy coffee,and within a few months he was drinking several cups a day.In fact,if he did not drink several cups a day,he was miserable.This suggests that,for Michel,

• A)demand for coffee has increased.
• B)coffee is a need,not a want.
• C)diminishing marginal utility does not apply to coffee consumption.
• D)economic models cannot be applied to habit-forming substances.

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Definitions:

Income Statement

A financial document summarizing the revenues, costs, and expenses incurred during a specified period, typically a fiscal quarter or year.

Income Statement Approach

A method for estimating bad debts expense that focuses on income statement relationships, often involving a percentage of sales or accounts receivable.

Balance Sheet Approach

A method in accounting that focuses on valuing all assets and liabilities listed on the balance sheet at their current market values to provide a snapshot of a company's financial condition at a specific point in time.

Direct Write-off Approach

An accounting method for dealing with bad debts where specific accounts receivable are written off against income at the time they are determined to be uncollectible.