Figure 3-6 -Which of the Following Is Evidence of a Shortage of a Shortage

question 116

Multiple Choice

Figure 3-6
-Which of the following is evidence of a shortage of walnuts?

• A) Firms lower the price of walnuts.
• B) The price of cashews is lowered in order to make up for the walnut shortage.
• C) The equilibrium price of walnuts falls due to a decrease in demand.
• D) The quantity demanded of walnuts is greater than the quantity supplied.

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Definitions:

Indirect Method

A method of reporting cash flows from operating activities by adjusting net income for changes in non-cash accounts.

Direct Method

A way of preparing the cash flow statement where actual cash flow information from the company's operations is used.

Operating Activities

Transactions and events that affect net income, primarily related to the core operations of a business.

Direct Method

An approach to cash flow statement preparation that lists major classes of gross cash receipts and payments.