If an Increase in the Price of Peaches Reduces the Demand

question 229

Multiple Choice

If an increase in the price of peaches reduces the demand for cream, this indicates that peaches and cream are

• A) normal goods.
• B) inferior goods.
• C) complements.
• D) substitutes.

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Definitions:

Direct Labor

The wages or salaries paid to employees who are directly involved in producing goods or providing services.

Factory Overhead

All indirect costs associated with manufacturing, excluding direct materials and direct labor, such as utilities, rent, and salaries for managers.

Direct Labor

The labor costs directly traceable to the production of goods, including wages of workers on the production line.

Factory Overhead

All manufacturing costs that are not directly related to the production of goods, including costs associated with operating the factory.