Jeep Cherokees Are a Normal Good

question 156

Multiple Choice

Jeep Cherokees are a normal good. If people's incomes increase, the direct result will be

• A) an increase in the supply of the vehicles.
• B) a decrease in the demand for the vehicles.
• C) an increase in the demand for the vehicles.
• D) Both answers A and C are correct.

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Definitions:

Variable Costs

Expenses that vary directly with the level of production or output, such as materials and labor costs.

Fixed Cost

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance.

Net Operating Income

A measure of a company's profitability, calculated by subtracting operating expenses from operating revenues, excluding taxes and interest.

EBIT

A financial performance metric that calculates a company's profits before accounting for interest and income tax costs, including all other expenses.