If the Price of a Good Is Zero, a Rational

question 136

Multiple Choice

If the price of a good is zero, a rational consumer will

• A) buy all of the units available.
• B) not consume the good at all since it must not be valuable if it has a zero price.
• C) stop consuming the good when marginal utility is zero.
• D) consume the good up to the point where total utility is just below zero.

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Definitions:

Unearned Rent

Income received for rent before the rental period has occurred, classified as a liability until the services (rental period) are performed.

Accrued Salaries

Salaries that have been earned by employees but have not yet been paid by the employer, recognized as a liability on the balance sheet.

Journal Entry

A record in the books of accounts that documents a business transaction in terms of debits and credits.

Adjusting Entries

Fiscal period closing entries in accounts to properly assign incomes and expenditures to the interval in which they factually took place.