You Decide to Decrease the Quantity of Ice Cream Purchased

question 193

Multiple Choice

You decide to decrease the quantity of ice cream purchased each month when the price increases in part because the higher price causes an implicit reduction in your income.This is an indication of the:

• A) income effect.
• B) utility effect.
• C) consumption effect.
• D) substitution effect.

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Definitions:

Specific Write-off

The action of recognizing that a specific asset, often an account receivable, has become uncollectible and removing its value from the books.

Allowance for Doubtful Accounts

A contra-asset account that reduces the total amount of accounts receivable to reflect the amount that is expected to be uncollectible.

Bad Debts Expense

An expense account reflecting amounts that are not expected to be collected due to customer defaults.

Bad Debts Recovered

Money that was previously written off as unrecoverable but has since been collected.