Suppose You Manage a Corner Grocery Store

question 149

Multiple Choice

Suppose you manage a corner grocery store.If peanut butter is an inferior good,what do you suppose would happen to the price and quantity sold of peanut butter as incomes fell during a recession?

• A)The price would increase and the quantity would decrease.
• B)The price and quantity would both increase.
• C)The price and quantity would both decrease.
• D)The price would decrease and the quantity would increase.

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Definitions:

Work In Process

An inventory category that refers to partially completed goods that are still in production.

FIFO Method

"First In, First Out" method, an inventory costing technique that assumes the first items added to inventory are the first ones sold.

Beginning Inventory

The value of all the inventory held by a business at the start of an accounting period.

Equivalent Units

A concept in cost accounting used to express the amount of work done on incomplete units in terms of fully completed units.