Figure 10-8 -Refer to Figure 10-8.If the Price of Biscotti Is $1.50

question 91

Multiple Choice

Figure 10-8

-Refer to Figure 10-8.If the price of biscotti is $1.50 and the price of a cappuccino is $3.00, what is the slope of the budget constraint?

• A)-2
• B)-(3.00 - 1.50)/(3.00 + 1.50)= -1/3
• C)-1/2
• D)The slope cannot be determined without the value of income.

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Definitions:

Fair Value

The price at which an asset would be bought or sold in an orderly transaction between market participants at the measurement date.

Historical Cost Principle

An accounting principle that states assets should be recorded and reported at their original purchase price, not their current market value.

Economic Entity Assumption

The economic entity assumption is an accounting principle that treats a company as a separate entity from its owners for reporting purposes.

Comparability

A qualitative characteristic of financial information that allows stakeholders to identify similarities and differences between two or more sets of economic facts.