Which of the Following Is an Example of the Law

question 22

Multiple Choice

Which of the following is an example of the law of demand?

• A) A decrease in the price of tea is followed by an increase in tea purchases.
• B) A decrease in the price of tea is followed by a decrease in tea purchases.
• C) An increase in the price of tea has no effect on the amount of tea purchased.
• D) The amount of tea purchased increases when the price is constant.

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Definitions:

Gain

The increase in the value of an asset or a decrease in the value of a liability, which results in an increase in the equity of a business.

Fixed Asset Turnover Ratio

A financial ratio that measures how efficiently a firm uses its fixed assets to generate sales, calculated by dividing net sales by net fixed assets.

Sales Revenue

The total amount of money generated by the sale of goods or services related to a company's primary operations.

Operating Expenses

Recurring expenses incurred during normal business operations, such as rent, utilities, and payroll.