If Jack Bought 18 CDs Last Year When His Income

question 13

Multiple Choice

If Jack bought 18 CDs last year when his income was $20,000 and he buys 19 CDs this year when his income is $25,000, then for Jack CDs are

• A)an inferior good.
• B)a normal good.
• C)a substitute good.
• D)a complementary good.
• E)There is not enough information to answer this question.

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Definitions:

Activity-Based Costing

A costing method that allocates overhead and indirect costs to related products and services based on their usage of resources.

Lower-Cost Materials

This refers to choosing materials that are less expensive without significantly compromising on quality, often to reduce production costs.

Activity Rate

refers to the cost driver rate that is used in activity-based costing to allocate costs to products or services.

Indirect Labor

Labor costs associated with workers who assist in the production process but do not directly contribute to the manufacturing of the product.