The _____ Effect Occurs When Price Changes and Therefore Leads

question 8

Multiple Choice

The _____ effect occurs when price changes and therefore leads to a change in quantity demanded and when consumers switch from relatively high-priced goods to relatively low-priced goods.

• A) income
• B) utility
• C) substitution
• D) optimization

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Definitions:

Finished Goods Inventory

Items that have completed the manufacturing process and are ready for sale to customers.

Direct Labour

Direct Labour refers to the work exerted by employees who are directly involved in the production of goods or services.

Work in Process

Inventory that includes all items that are in the process of being produced but are not yet complete.

Product Costs

Costs that are directly tied to the production of goods, including materials, labor, and overhead.