Long-Distance Travel by Bus Is an Inferior Good

question 221

Multiple Choice

Long-distance travel by bus is an inferior good. As peopleʹs incomes increase and other things remain the same, you predict that the

• A) demand for long-distance travel by bus will increase as the price of long-distance travel by bus falls.
• B) price of long-distance travel by bus will fall and the demand for long -distance travel by bus will increase.
• C) price of long-distance travel by bus will fall.
• D) demand for long-distance travel by bus will decrease and the price will rise.

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Definitions:

Time and Materials Pricing

A contract or pricing method where the customer pays the supplier based on the time spent to complete the work and the cost of materials used.

Production Capacity

The maximum amount of goods that can be produced in a given timeframe using available resources.

Contribution Margin

The amount by which sales revenue exceeds variable costs, used to cover fixed costs and generate profit.

Sales Mix

The composition of different products or services sold by a business, affecting overall sales volume, revenue, and profit margins.