Potato Chips and Popcorn Are Substitutes

question 22

Multiple Choice

Potato chips and popcorn are substitutes. A subsidy for potato chips will ______the demand for popcorn and the quantity of popcorn sold will ______.

• A) increase; increase
• B) increase; decrease
• C) decrease; decrease
• D) decrease; increase

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Definitions:

Perpetual Inventory System

An inventory management method where stock levels are updated in real-time with each sale or purchase.

Purchases Discounts

Reductions in price offered by suppliers to buyers as an incentive for early payment of their purchase invoices.

Periodic Inventory System

An inventory valuation method where updates to inventory levels are made periodically, typically at the end of an accounting period, rather than after each sale or purchase.

Purchases Discounts

Reductions in price given by suppliers for early payment of invoices.