In Year 1 the Average Price of X Is $10,and

question 196

Multiple Choice

In year 1 the average price of X is $10,and in year 2 the average price of X is $23.Still,consumers buy more units of X in year 2 than in year 1.It follows that

• A) the law of supply does not hold for good X.
• B) demand for good X could be higher in year 2 than in year 1.
• C) supply of good X could be less in year 2 than in year 1.
• D) good X buyers have received an increase in income between year 1 and year 2, and good X is a normal good.
• E) b and d

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Definitions:

Accrual-based Income

A method of accounting that records revenue when it is earned and expenses when they are incurred, regardless of when cash is received or paid.

Tax Rate

The percentage at which an individual or corporation is taxed by the government.

Deferred Income Taxes

Taxes applicable to income that are due in the future periods due to temporary differences between the tax base of assets or liabilities and their carrying amount in the financial statements.

Operating Income

The profit realized from a business's core operating activities, excluding non-operating income, taxes, and interest expenses.