If a Decrease in the Price of Gasoline Increases the Demand

question 349

Multiple Choice

If a decrease in the price of gasoline increases the demand for large cars, then

• A) gasoline and large cars are substitutes in consumption.
• B) gasoline and large cars are complements in consumption.
• C) gasoline is an inferior good.
• D) large cars are an inferior good.

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Definitions:

Gain on Sale

The profit earned from the sale of an asset or investment, calculated as the difference between the sale price and the original purchase price.

Operating Activities

The day-to-day actions that are involved in running a business and generating revenue, such as production, sales, and delivery of the company’s product and services.

Direct Method

A way of reporting cash flows from operating activities by listing major classes of gross cash receipts and payments.

Amortization of Bond Premium

The process of gradually writing off the premium paid over the par value of a bond over its life.