Identify the Truthfulness of the Following Statements

question 44

Multiple Choice

Identify the truthfulness of the following statements.
I. In a perfectly competitive market, import quotas and tariffs tend to lead to higher domestic prices and deadweight loss.
II. In a perfectly competitive market, import quotas and tariffs tend to lead to higher domestic prices without the usual deadweight loss that would accompany them.

• A) Both I and II are true.
• B) Both I and II are false.
• C) I is true; II is false.
• D) I is false; II is true.

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Definitions:

Bad Debt Expense

The portion of receivables that a company estimates it will not collect, considered as an expense in the income statement.

Estimated Uncollectible Accounts

An accounting provision for debts that are anticipated to be uncollectable from customers or clients.

Direct Write-off Method

An accounting approach where uncollectable accounts receivable are directly written off against income at the time they are deemed to be uncollectible.

Generally Accepted Accounting Principles

A set of rules, standards, and practices used by accountants in the U.S. to prepare, present, and report financial statements.