Normal Capacity and Budgeted Capacity Are Demand-Based Capacity Measurements

question 89

True/False

Normal capacity and budgeted capacity are demand-based capacity measurements.

---

Definitions:

Complements

Goods or services that are used together, where an increase in demand for one leads to an increase in demand for the other.

Income Elasticity

A measure of how much the demand for a good or service changes in response to a change in consumers’ income.

Normal Good

A type of good for which demand increases as consumer income rises, and decreases as consumer income falls.

Income Elasticity

Income elasticity of demand measures how much the quantity demanded of a good changes as consumer income changes.