Refer to the Accompanying Figure

question 92

Multiple Choice

Refer to the accompanying figure.  
 Suppose that James' initial budget constraint shifts from BC1 to BC2, and as a result, his best affordable bundle moves from point A to point B. According to this figure:

• A)spinach is an inferior good.
• B)potatoes are an inferior good.
• C)spinach and potatoes are substitutes.
• D)spinach and potatoes are complements.

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Definitions:

Merchandise sold cost

The total expense incurred to produce or purchase the goods that have been sold to customers.

Perpetual system

An inventory accounting system that records purchases and sales of inventory immediately through the use of technology, offering continuous stock level information.

LIFO

An inventory valuation method that assumes the last items placed in inventory are the first ones sold ("Last In, First Out").

Merchandise sold cost

The cost associated with the goods that have been sold to customers, typically accounting for the purchase or production cost of the merchandise.