Demand for One Item Goes Down When the Price of Another

question 302

Multiple Choice

Demand for one item goes down when the price of another item goes down. These items must be

• A) substitutes.
• B) complements.
• C) normal goods.
• D) inferior goods.

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Definitions:

Accumulated Depreciation

The aggregate depreciation charged on a fixed asset since its acquisition.

Loss on Disposal

A financial loss that occurs when an asset is sold for less than its carrying amount on the books.

Gain on Disposal

The profit earned from selling a capital asset for more than its book value.

Straight-line Method

A method of calculating depreciation of an asset, dividing the difference between its cost and salvage value by the total number of years it is expected to be in use.