AICPA CPA-Business Exam - Topic 3 Question 97 Discussion

Actual exam question for AICPA's CPA-Business exam

Question #: 97
Topic #: 3

[All CPA-Business Questions]

Long Lake Golf Course has raised green fees to a nine-hole game due to an increase in demand.

Which of the following is correct?

AThe regular weekday and weekend demand is inelastic.

BThe regular weekday and weekend demand is elastic.

CThe senior citizen and weekend demand is inelastic.

DThe senior citizen demand is elastic and weekend demand is inelastic.

Show Suggested Answer

Suggested Answer: D

Choice 'd' is correct. Inspections. Inspections are part of order costs, not carrying costs.

Choices 'a' and 'c' are incorrect. Inventory carrying costs include all costs associated with warehousing (storing) inventory (e.g., storage, insurance, obsolescence, and spoilage associated with holding inventory).

Choice 'b' is incorrect. The economic cost of holding inventory includes the implicit (opportunity) cost of foregoing a return on the money invested in inventory.

by Marlon at Sep 13, 2024, 02:24 PM

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Edelmira

3 months ago

Sounds like they’re cashing in on the popularity!

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Alishia

3 months ago

Wait, are senior citizens really that price-sensitive?

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Sharika

3 months ago

I disagree, I think the demand is pretty inelastic for weekends.

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Eleni

4 months ago

Totally makes sense, demand is definitely elastic!

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Whitley

4 months ago

I heard the green fees went up because more people are playing.

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Donette

4 months ago

I’m leaning towards option D, but I’m confused about how to differentiate between elastic and inelastic for seniors versus weekends.

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Louvenia

4 months ago

I practiced a similar question where senior discounts were mentioned, and I think that could make their demand inelastic.

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Lizette

4 months ago

I’m not entirely sure, but I think weekend demand might be more elastic since people have more options for activities.

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Daron

5 months ago

I remember studying demand elasticity, and I think inelastic demand means people will pay more regardless of price changes.

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Scarlet

5 months ago

Okay, I think I've got a strategy for this. The key is to consider the different types of demand mentioned - regular weekday, regular weekend, and senior citizen. I'll need to analyze how each of those might respond to the increase in green fees.

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Jose

5 months ago

Hmm, I'm a bit unsure about this one. The question is asking about the elasticity of demand, but it's not clear to me how to determine that based on the information given. I'll need to think this through step-by-step.

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Timothy

5 months ago

This seems like a straightforward question on demand elasticity. I'll need to carefully consider the information provided about the increase in green fees and the different types of demand.

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Talia

5 months ago

This is a tricky one. I'm not entirely confident in my understanding of demand elasticity, so I'll need to review that concept before attempting to answer. Maybe I can eliminate some of the options first to narrow it down.

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Fabiola

10 months ago

I'm going with D. It makes sense that the senior citizens would have a more inelastic demand since they may be on fixed incomes, while the weekend golfers have more flexibility in their schedules.

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Mozell

9 months ago

Yeah, that makes sense. Senior citizens might be more willing to pay higher fees to play at their preferred times.

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Peggie

9 months ago

I think you're right, senior citizens are probably less likely to change their golfing habits compared to weekend golfers.

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Rozella

9 months ago

I agree with you, D seems like the most logical choice.

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Art

10 months ago

Ha! Looks like the golf course is trying to squeeze more money out of the players. I bet the senior citizens are not happy about the fee hike.

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Dell

9 months ago

D) The senior citizen demand is elastic and weekend demand is inelastic.

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Stefania

10 months ago

C) The senior citizen and weekend demand is inelastic.

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Deeanna

10 months ago

B) The regular weekday and weekend demand is elastic.

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Candida

10 months ago

A) The regular weekday and weekend demand is inelastic.

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Abel

10 months ago

That's an interesting point. Maybe the increase in green fees will affect different groups differently.

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Ettie

10 months ago

Hmm, I'm not sure. The question is a bit confusing. Maybe the senior citizens' demand is inelastic, but the weekend demand is elastic? I'll have to think about this one.

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Leonie

9 months ago

Hmm, I think you might be right. The weekend demand could be elastic.

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Tula

9 months ago

A) The regular weekday and weekend demand is inelastic.

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Lucille

11 months ago

I disagree, I believe the demand for senior citizen and weekend games is inelastic.

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Christiane

11 months ago

I think the answer is B. If the demand is inelastic, raising the green fees would not have increased revenue. The fact that they were able to raise the fees suggests the demand is elastic.

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Abel

11 months ago

I think the demand for regular weekday and weekend games is elastic.

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