Author Question: Suppose Betty spends her monthly allowance on buying computer games, watching movies, and ... (Read 45 times)

crobinson2013

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Suppose Betty spends her monthly allowance on buying computer games, watching movies, and parasailing. If an increase in her monthly allowance increases her expenditure on parasailing activities we can say that:
 a. parasailing is an inferior good.
  b. computer games are inferior goods.
  c. parasailing is a normal good.
  d. computer games are normal goods.

Question 2

Accountants do not often report economic profits on income statements and balance sheets because:
 a. economic profits are exactly the same as accounting profits, and thus they do not need to be broken out in financial statements.
  b. the cost of capital, while easy to measure, is very difficult to report.
  c. it might make some firms look as though they possessed an unfair competitive advantage over other firms.
  d. the cost of equity capital is very difficult to measure, and opportunity costs vary from investor to investor.
  e. the concept of economic profit is not firmly established in economic theory.



SamMuagrove

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Answer to Question 1

C

Answer to Question 2

d



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