If Two Products Are Substitutes, Then The

question 21

Multiple Choice

If two products are substitutes, then the:

• A)income elasticity of demand for both will be high.
• B)price elasticity of demand for both will be positive.
• C)cross-price elasticity of demand between them will be negative.
• D)cross-price elasticity of demand between them will be positive.

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Definitions:

Cost of Goods Manufactured

The total production cost of goods completed during a specific accounting period, including labor, material, and overhead costs.

Work In Process

Inventory that includes goods that are in the production process but are not yet completed.

Factory Overhead

All indirect costs associated with manufacturing, including utilities, rent, and salaries for managers.

Direct Materials

Basic substances that can be directly linked and attributed to the creation of particular products or services.