Honey and Jam Are Substitute Products

question 100

Multiple Choice

Honey and jam are substitute products. If the price of honey increases, the demand for:

• A) honey will increase.
• B) honey will decrease, causing its price to fall.
• C) jam will increase, causing the price of jam to increase as well.
• D) jam will decrease, causing the price of jam to fall.

---

Definitions:

Current Liability

Financial obligations a company must settle within one year, including accounts payable, taxes, and short-term loans.

Aggregate Accounts Receivable

The total amount of money owed to a company by its customers for goods or services delivered but not yet paid for.

Credit Period

The length of time for which credit is extended. If the credit period is lengthened, then sales will generally increase, as will accounts receivable. This will increase the firm’s financing needs and possibly increase bad debt losses. A shortening of the credit period will have the opposite effect.

Credit Search

A process used by lenders to review an individual's or business's credit history before granting loans or credit.