Which Types of Goods Are Most Adversely Affected by Recessions

question 242

Multiple Choice

Which types of goods are most adversely affected by recessions?

• A)Goods for which the income elasticity coefficient is relatively low or negative.
• B)Goods for which the income elasticity coefficient is relatively high and positive.
• C)Goods for which the cross elasticity coefficient is positive.
• D)Goods for which the cross elasticity coefficient is negative.

---

Definitions:

Fixed Costs

Costs that do not vary with the volume of production or sales, such as rent, salaries, and insurance premiums.

Units

A measure of quantity that indicates the count or quantity of a product or service.

High-Low Method

An approach to estimate fixed and variable costs using the highest and lowest levels of activity.

Variable Cost

Costs that change in proportion to the level of production or business activity, such as materials and labor costs.