The Equation C = 35

question 121

Multiple Choice

The equation C = 35 + .75Y, where C is consumption and Y is disposable income, tells us that:

• A)households will consume three-fourths of whatever level of disposable income they receive.
• B)households will consume $35 if their disposable income is zero and will consume three-fourths of any increase in disposable income they receive.
• C)there is an inverse relationship between disposable income and consumption.
• D)households will save $35 if their disposable income is zero and will consume three-fourths of any increase in disposable income they receive.

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Definitions:

Price Variance

The difference between the actual cost of a product or service and its standard or expected cost, which can indicate issues with budgeting or pricing strategy.

Direct Materials

Raw materials that can be directly traced to the production of a specific product and are a variable cost.

Standard Cost

A predetermined cost of manufacturing a product or performing a service, used as a benchmark for measuring performance.

Direct Material

Represents raw materials that can be directly attributed to the production of specific goods, directly affecting the finished product's cost and quality.