A Shortage of Wheat

question 68

Multiple Choice

A shortage of wheat:

• A) is impossible if people are hungry.
• B) is impossible if the price of wheat is higher than the market equilibrium.
• C) will result when the quantity supplied exceeds the quantity demanded at the current price.
• D) is unlikely to cause any change in the price of wheat.

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Definitions:

Direct Write-off Method

An accounting practice where uncollectible accounts receivable are written off directly against income at the time they are deemed irrecoverable.

Accounting Equation

Assets = Liabilities + Owner’s Equity.

Factoring

A financial transaction in which a business sells its accounts receivable to a third party at a discount to gain immediate cash.

Uncollectible Accounts

Accounts receivable that a business has been unable to collect and deems as unlikely to be paid.