Which of the Following Is Consistent with the Law of Demand

question 95

Multiple Choice

Which of the following is consistent with the law of demand?

• A) People substitute higher-priced goods for higher-quality goods.
• B) People substitute some higher-priced goods for other higher-priced goods.
• C) People substitute lower-priced goods for higher-priced goods.
• D) People substitute some lower-priced goods for other lower-priced goods.

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Definitions:

Variable Expense

Costs that vary depending on a company's production volume or activity level.

Target Profit

The anticipated profit figure set by a business for a given period, often guiding pricing and production decisions.

Monthly Fixed Expense

Expenses that do not vary with production volume or business activity level, incurred on a monthly basis.

CM Ratio

Contribution margin ratio, showing the portion of sales revenue that is not consumed by variable costs and contributes to covering fixed costs.