Which One of the Following Would Cause a Decrease in the Cost

question 101

Multiple Choice

Which one of the following would cause a decrease in the cost ratio as used in the retail inventory method?

• A) Higher retail prices
• B) Lower net markups
• C) More employee discounts given
• D) Higher freight-in charges

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Definitions:

Consumer Equilibrium

The point at which the quantity of goods consumed by a consumer maximizes their utility, given their budget constraints.

Marginal Utility Per Dollar

The additional satisfaction or utility gained from spending one more dollar on a good or service.

Consumer Equilibrium

A state where the consumer has allocated their resources in such a way that maximizes their utility, given their budget constraint.

Income And Substitution Effects

The changes in quantity demanded of a good due to a change in income (income effect) or a change in price leading consumers to substitute one good for another (substitution effect).