Related to the Economics in Practice on Page 109: Frank

question 8

Multiple Choice

Related to the Economics in Practice on page 109: Frank runs a corner delicatessen and one day decides to raise his prices by 10 percent. Total revenue is likely to ________ at the end of the first month of the higher prices since demand is relatively elastic in the ________ term.

• A) rise; short
• B) fall; short
• C) rise; long
• D) fall; long

Calculate the present value of lease payments using provided discount rates.

Understand how maintenance agreements and executory costs are treated in lease accounting.

Recognize the impact of leasing on financial ratios.

Compute the depreciation expense for leased assets.

---

Definitions:

Sales Tax

A tax levied by the government on the sale of goods and services.

Current Maturities

The portion of a long-term debt that is due to be paid within the next year.

Contingency

A future event or circumstance that is possible but cannot be predicted with certainty, often accounted for in financial planning.

Remote

Referring to work, operations, or processes conducted away from a central office or location, often facilitated by digital communication technology.