Consider Cars and Gasoline

question 94

Multiple Choice

Consider cars and gasoline. Other things being equal, when the price of cars decreases, the demand for gasoline is likely to

• A)decrease because the two goods are complements.
• B)remain unchanged because cars and gasoline are two distinct markets.
• C)remain unchanged.
• D)remain unchanged because cars and gasoline are produced independently of one another.
• E)increase because the two goods are complements.

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Definitions:

Purchase Returns

Goods returned by the buyer to the seller due to defects, excess supply, or other reasons.

Sales Discount

A reduction in the price of goods or services offered to customers, typically to prompt early payment or bulk purchases.

Contra Revenue Account

An account used to record reductions in gross revenue, such as discounts, returns, and allowances.