Use the Following to Answer Questions

question 196

Multiple Choice

Use the following to answer questions:
Figure: Harold's Indifference Curves
The figure shows three of Harold's indifference curves for bread and cheese.
-(Figure: Harold's Indifference Curves) Look at the figure Harold's Indifference Curves. If the price of cheese is $2 per pound and Harold has $10 to spend on bread and cheese, Harold _____ his consumption of cheese as the price of bread rises from $1 per loaf to $2 per loaf, indicating that bread and cheese are _____.

• A) increases; substitutes
• B) increases; complements
• C) decreases; substitutes
• D) decreases; complements

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Definitions:

Future Interest Rates

Expected rates of interest in the future, affecting everything from loans to investments.

Abnormal Return

The difference between the actual return of an investment and the expected return based on the risk and market's overall returns.

Sales Increase

An upward movement in the quantity sold or the revenue generated from the sale of a product or service over a specific period.

Beta

A measurement of a stock's volatility compared to the overall market volatility, indicating its relative risk.