Dave Consumes Two Normal Goods,X and Y,and Is Currently at an Optimum.If

question 168

Multiple Choice

Dave consumes two normal goods,X and Y,and is currently at an optimum.If the price of good X falls,we can predict with certainty that

• A) Dave will definitely consume more of both goods since his real income has risen.
• B) the substitution effect will be positive for good X and negative for good Y.
• C) may consume more or less of good X and he will definitely consume less of good Y.
• D) the substitution effect will offset the income effect for good X.

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Definitions:

Labor Costs

The total sum of all wages paid to employees, as well as the cost of employee benefits and payroll taxes incurred by an employer.

Manufacturing Overhead

All indirect costs associated with the manufacturing process, including but not limited to utilities, maintenance, and salaries of supervisory personnel.

Manufacturing Inventories

Manufacturing inventories consist of raw materials, work-in-process items, and finished goods that are held by a company in the course of producing its products.

Work-In-Process

Items that are in production but are not yet completed; represents one of the stages in the inventory of a manufacturing company.