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If Edna buys more pasta when the price of pasta increases, we can infer that for Edna
a. pasta is a normal good for which the income effect exceeds the substitution effect.
b. pasta is a normal good for which the substitution effect exceeds the income effect.
c. pasta is an inferior good for which the income effect exceeds the substitution effect.
d. pasta is an inferior good for which the substitution effect exceeds the income effect.
In 2019, the Mudcat Gas Company purchased a small natural gas company with two assets— land and natural gas reserves—for $158,000,000. The fair value of the land was$1,500,000 and the fair value of the natural gas reserves was $155,250,000. At that time, estimated recoverable gas was 105,000,000 cubic feet.
If Mudcat recovers and sells 2,500,000 cubic feet in a year, compute the depletion. Round your answer to the nearest dollar.
Considering the following situation, which each involves two options. Calculate which option is less expensive. Are there unstated factors that might affect your decision? You must decide whether to buy a new car for or lease that car for a 3-year period. Under the terms of the lease, you make a down payment of and have monthly payments of . At the end of years, the leased car has a residual value (the amount you will pay if you choose to buy the car at the end of the lease period) of . Assume that if you buy the car, you can sell it at the end of years for the same amount as the residual value. Is it less expensive to buy or to lease?
This problem demonstrates the effects of transactions on the current ratio and the debt ratio of Hiaport Company. Hiaport’s condensed and adapted balance sheet at December 31, 2011, follows.
Assume that during the first quarter of the following year, 2012, Hiaport completed the following transactions: a. Paid half of the current liabilities. b. Borrowed $3.0 million on long-term debt. c. Earned revenue of$2.4 million, on account. d. Paid selling expense of $0.6 million. e. Accrued general expense of$0.3 million. Credit General Expense Payable, a current liability. f. Purchased equipment for $4.9 million, paying cash of$2.0 million and signing a long-term note payable for $2.9 million. g. Recorded depreciation expense of$0.9 million. 1. Compute Hiaport’s current ratio and debt ratio at December 31, 2011. Round to two decimal places. 2. Consider each transaction separately. Compute Hiaport’s current ratio and debt ratio after each transaction during 2012—that is, seven times. Round ratios to two decimal places. 3. Based on your analysis, you should be able to readily identify the effects of certain transactions on the current ratio and the debt ratio. Test your understanding by completing these statements with either “increase” or “decrease.” a. Revenues usually ___________ the current ratio. b. Revenues usually ____________ the debt ratio. c. Expenses usually _______________ the current ratio. (Note: Depreciation is an exception to this rule.) d. Expenses usually _________________ the debt ratio. e. If a company’s current ratio is greater than 1.0, as for Hiaport, paying off a current liability will always _________________the current ratio. f. Borrowing money on long-term debt will always _________ the current ratio and _____________ the debt ratio.
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