If Macaroni and Cheese Is an Inferior Good, Falling Incomes

question 34

Multiple Choice

If macaroni and cheese is an inferior good, falling incomes will tend to:

• A) put upward pressure on its price and quantity.
• B) put downward pressure on its price and quantity.
• C) raise its price but lower its quantity.
• D) lower its price but raise its quantity.

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Definitions:

FIFO

"First In, First Out," an inventory valuation method where the first items placed in inventory are the first sold.

Gross Profit

The difference between sales revenue and the cost of goods sold, representing the basic profit from buying and selling goods or services.

LIFO Method

Last In, First Out method; an inventory valuation method where the last items placed in inventory are the first ones to be used or sold.

Rising Prices

An economic condition characterized by an increase in the cost of goods and services over time, affecting purchasing power.