Jelly Beans and Popcorn Are Substitutes

question 368

Multiple Choice

Jelly beans and popcorn are substitutes. A fall in the price of a bag of jelly beans will the demand for popcorn and the price of popcorn will .

• A) increase; fall
• B) decrease; fall
• C) decrease; rise
• D) increase; rise

---

Definitions:

Contribution Margin

The difference between the sales revenue of a product and its variable costs, used to cover fixed costs and generate profit.

Absorption Costing

A costing technique that incorporates all costs associated with production, including both fixed and variable expenses, into the product's price.

Income Increase

A rise in the amount of money earned from various sources, including work, investments, or business operations.

Variable Costing

A costing method that includes only variable costs—costs that change with production levels—in the calculation of product costs.