AICPA CPA-Business Exam - 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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Charlene

4 months ago

Surprised they switched to steak so quickly!

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Gwenn

5 months ago

Nah, I think it's just a preference change, not elastic.

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Alva

5 months ago

Wait, isn't it more about income elasticity?

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Tomoko

5 months ago

Totally agree, they upgraded their diet!

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Marjory

5 months ago

Hamburger is definitely an inferior good in this case.

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Helga

6 months ago

I thought perfectly inelastic meant that demand wouldn’t change at all, so that doesn’t seem right here. I’m confused about the other options though.

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Elbert

6 months ago

I practiced a question like this before, and I think it was about how demand changes with income. I’m leaning towards it being an inferior good.

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Reiko

6 months ago

I’m a bit unsure, but I feel like this could relate to elasticity. Maybe it’s more elastic since they changed their staple?

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Pura

6 months ago

I remember studying how inferior goods work, and I think hamburger might fit that definition since they switched to steak with higher income.

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Launa

6 months ago

I'm pretty confident on this one. The key is that the family's income has increased, and they've substituted the cheaper hamburger for the more expensive steak. That means hamburger is an inferior good, and the demand for it is relatively elastic in response to the change in income.

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Adrianna

6 months ago

Okay, I've got this. Since the family's income has doubled, and they've switched from hamburger to the more expensive steak, that means hamburger is an inferior good in this case. The demand for hamburger is relatively elastic, since a change in income led to a significant change in consumption.

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Cammy

6 months ago

Hmm, I'm a bit unsure about this one. I know demand elasticity has to do with how responsive demand is to changes in price or income, but I'm not totally clear on the difference between elastic, inelastic, and inferior goods. Let me re-read the question and think it through step-by-step.

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Barrett

6 months ago

This seems like a straightforward question on demand elasticity. I'll think through the scenario carefully and consider how the change in income affects the demand for hamburger.

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Dean

6 months ago

This is a tricky one. I'm going to have to think it through step-by-step. Let me re-read the question and options again to make sure I understand the nuances.

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Paul

6 months ago

I think the Dynamic Failure Detection and Recovery pattern mainly deals with runtime failures, so I'm leaning towards option B.

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Mollie

11 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

11 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

10 months ago

D) Is perfectly inelastic.

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Veronika

10 months ago

C) Responds as an inferior good.

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Hillary

10 months ago

B) Is perfectly elastic.

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Jose

10 months ago

A) Is relatively elastic.

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Jannette

11 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

10 months ago

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

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Raina

10 months ago

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

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Ty

11 months ago

I think the demand for hamburger is relatively elastic.

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Tiara

12 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

10 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

10 months ago

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

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Lisbeth

10 months ago

A) Is relatively elastic.

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Benton

12 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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