Which of the Following Transactions Is Represented by the Diagram

question 32

Multiple Choice

Which of the following transactions is represented by the diagram below?

• A) An automobile salvage business holds weekly auctions at which it sells its entire inventory.
• B) A grocery store sells products to consumers.
• C) A hobbyist restores antique cars. When a car is finished, she sells it on eBay.
• D) A firm sells movies to consumers through an online downloading service.

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Definitions:

Tax Return

A document filed with state or federal taxing authorities that reports income, expenses, and other pertinent tax information to calculate tax liability.

Short Run

A period in which at least one input, such as plant size, is fixed and cannot be changed by the firm.

Fixed Plant Capacity

The maximum output that a facility can produce in a given period under normal conditions, determined by its physical size and design.

Diminishing Returns

An economic principle stating that as investment in a particular area increases, the rate of profit or benefits gained from additional investment will eventually decline.