If the Demand for Used Cars Decreases After the Price

question 96

Multiple Choice

If the demand for used cars decreases after the price of a new car falls,used cars and new cars are

• A) inferior goods.
• B) substitute goods.
• C) complementary goods.
• D) normal goods.
• E) The questions errs because it is the quantity of used cars, NOT the demand for used cars, that will change when the price of a new car falls.

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Definitions:

Current Liability

A financial obligation that is due to be paid within one year.

Notes Payable

Financial obligations or loans that companies are required to pay back within a specified timeframe, often evidenced by promissory notes.

Wage and Tax Statement

A document, typically a W-2 form in the U.S., that reports an employee's annual wages and the amount of taxes withheld from their paycheck.

Current Ratio

A financial metric evaluating a firm's capacity to settle debts due within a year by dividing its current assets by its current liabilities.