AICPA Exam CPA-Business Topic 2 Question 88 Discussion

Actual exam question for AICPA's CPA-Business exam

Question #: 88
Topic #: 2

The Waymand family typically ate hamburger as a regular staple in their diet. In the last few years, the family income has doubled, and they have now replaced hamburger with steak as a regular staple in their diet. This is an example where the demand for hamburger:

AIs relatively elastic.

BIs perfectly elastic.

CResponds as an inferior good.

DIs perfectly inelastic.

Show Suggested Answer

Suggested Answer: C

Choice 'c' is correct. The most logical sequence in planning and controlling capital expenditures is to begin with identifying capital addition projects and other capital needs.

Choice 'a' is incorrect. Analyzing capital addition proposals omits other capital needs.

Choice 'b' is incorrect. Analyzing and evaluating all promising alternatives is beyond the scope of planning and controlling capital expenditures.

Choice 'd' is incorrect. Developing capital budgets is the same as planning and controlling capital expenditures.

by Laticia at May 22, 2024, 11:27 AM

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Mollie

2 months ago

I bet the Waymands are now all about that 'beef bourguignon' life. Gotta keep up with the Jones's, am I right?

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Leota

2 months ago

C is the correct answer, no doubt about it. Hamburger is clearly an inferior good in this scenario. Who would've thought the Waymands were such fancy steak eaters?

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Irving

26 days ago

D) Is perfectly inelastic.

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Veronika

27 days ago

C) Responds as an inferior good.

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Hillary

28 days ago

B) Is perfectly elastic.

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Jose

1 months ago

A) Is relatively elastic.

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Jannette

2 months ago

I'm going with D. The demand for hamburger is perfectly inelastic, meaning it doesn't respond to changes in income or price.

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Alpha

1 months ago

I agree with you, the demand for hamburger is perfectly inelastic.

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Raina

1 months ago

I believe the demand for hamburger responds as an inferior good.

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Ty

2 months ago

I think the demand for hamburger is relatively elastic.

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Tiara

3 months ago

Hmm, I'm not sure about this one. I was thinking B, but now I'm leaning towards C. This is a tricky one!

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Keneth

1 months ago

I agree, the increase in income causing a shift from hamburger to steak suggests it's an inferior good.

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Jose

1 months ago

No, I think it's C) Responds as an inferior good.

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Lisbeth

1 months ago

A) Is relatively elastic.

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Benton

3 months ago

I think the answer is C. When the family's income increased, they switched from the cheaper hamburger to the more expensive steak, indicating that hamburger is an inferior good.

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