Which of the Following Statements Is TRUE

question 19

Multiple Choice

Which of the following statements is TRUE?

• A) Consumer surplus is the difference between the maximum price a consumer is willing to pay for a good or service and its market price.
• B) Bill is willing to pay $10 for a pound of clay. If he buys a pound of clay at a market price per pound of $5, his consumer surplus is $2.
• C) Total consumer surplus is represented graphically by the area beneath the demand curve.
• D) Total consumer surplus is represented graphically by the area above the demand curve.

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Definitions:

Working Capital

The difference between a company's current assets and current liabilities, indicating short-term financial health.

Acid-test Ratio

A financial metric that measures a company's ability to cover its short-term liabilities with its most liquid assets.

Debt-to-equity Ratio

This proportion demonstrates the relative use of debt and shareholders' equity in the capital funding of a company's assets.

Receivable Turnover

A financial metric indicating how efficiently a company collects cash from credit sales by measuring the number of times average accounts receivable are collected over a period.