Suppose That the Price of Butter Is $3 Per Pound

question 92

Multiple Choice

Suppose that the price of butter is $3 per pound and the price of margarine is $2 per pound.If the price of butter rises to $3.90 and the price of margarine rises to $2.20,then the absolute price of butter has _______________ and the relative price of butter has _______________.

• A) risen; fallen
• B) fallen; risen
• C) risen; risen
• D) fallen; fallen

---

Definitions:

Accrual Earnings

The earnings of a company that are calculated based on accrual accounting, which records revenues when earned and expenses when incurred, regardless of cash flow.

Realized Operating Cash Flows

Cash flows that are generated from a company's normal business operations and have been received or can be readily converted to cash.

Stock Returns

The total return on investment from owning shares in a company, including dividends received and capital gains.

Industry Average

A benchmark representing the average performance or output of companies within the same sector.