If There Are Only Two Goods,coffee and Donuts,and Coffee Is

question 86

Multiple Choice

If there are only two goods,coffee and donuts,and coffee is an inferior good for a consumer,then:

• A)the consumer does not value an extra unit of coffee in terms of donuts.
• B)a price increase for coffee leads to a higher level of well-being.
• C)donuts cannot be an inferior good.
• D)donuts can be an inferior good but not a Giffen good.

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Definitions:

GAAP

Generally Accepted Accounting Principles, a set of accounting standards, guidelines, and procedures used in the United States for financial reporting.

Straight-Line Depreciation

A method for calculating the annual depreciation expense by equally distributing the cost of an asset minus its salvage value over its estimated useful life.

Group Method

A depreciation approach applied to a collection of assets that have similar service lives and uses, treating them as a single asset for depreciation purposes.