Use the Following to Answer Questions

question 365

Multiple Choice

Use the following to answer questions:
Scenario: Music Downloads and Streamed Movies
Phillip has an income of $300 per month, which he uses to purchase music downloads (MD) and streamed movies (SM) . Each music download costs $1 and each streamed movie costs $5.
-(Scenario: Music Downloads and Streamed Movies) Read the scenario Music Downloads and Streamed Movies. Suppose Phillip's income falls by half, and the prices for both music downloads and streamed movies also fall by half. As a result of this, Phillip:

• A) can buy fewer music downloads if he spends all of his income on music downloads.
• B) can buy fewer streamed movies if he spends all of his income on streamed movies.
• C) will not notice any change in his budget line.
• D) will undergo a parallel shift out of his budget line.

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Definitions:

Turnover

In a business context, this term can refer to the rate at which inventory is sold and replaced or the rate at which employees leave and are replaced within a company.

Return on Investment

A financial metric used to measure the profitability or efficiency of an investment, calculated by dividing net profit by the initial cost of the investment.

Minimum Required Return

This refers to the smallest expected or necessary rate of return on an investment to make it worthwhile.

Transfer Price

The amount levied on goods or services traded across sections or sister companies within the same organization.