Which Statement Best Illustrates Complementary Goods

question 79

Multiple Choice

Which statement best illustrates complementary goods?

• A) The price of tennis rackets declines so your economics instructor decides to take tennis lessons and purchases several cans of new tennis balls.
• B) The price of Apple Macintosh computers declines so your economics instructor sells his or her IBM personal computer and buys a Macintosh.
• C) After receiving a promotion and a hefty year-end bonus from the college, your economics instructor decides to stop buying denim jeans and switches to clothing befitting his or her loftier position on the faculty.
• D) Fearing that the price of pipe tobacco will rise next year, your economics professor goes to his local tobacconist and purchases an ample supply to last for several years.

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Definitions:

Debit

An accounting entry that results in either an increase in assets or a decrease in liabilities on a company's balance sheet.

Credit

A contractual agreement in which a borrower receives something of value now and agrees to repay the lender at a later date, typically with interest.

Income Statement Columns

The sections or divisions in an income statement that segregate information, such as revenues, expenses, and net income, for analysis.

Revenue And Expense

Key components of a profit-oriented organization's income statement, where revenue represents the total income earned and expense represents the cost incurred to earn that income.