When Two Goods Are Perfect Substitutes, the

question 385

Multiple Choice

When two goods are perfect substitutes, the

• A)indifference curve is a horizontal straight line.
• B)marginal rate of substitution is constant.
• C)indifference curve is a vertical straight line.
• D)Both a and b are correct.

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Definitions:

Sales Dollars

Sales dollars refer to the total revenue generated from goods or services sold by a company, expressed in monetary terms.

Pretax Income

The income of a company before tax is deducted.

Contribution Margin Ratio

A financial metric that measures how a product's selling price covers variable costs, expressed as a percentage of sales revenue.

Unit Contribution Margin

Unit contribution margin is the difference between the selling price of a product and its variable costs, indicating how much each unit sold contributes to covering fixed expenses and generating profit.