If the Price of Product X Falls and This Change

question 427

Multiple Choice

If the price of product X falls and this change increases the demand for product Y, then

• A) X and Y are complements.
• B) X and Y are substitutes.
• C) X is an inferior good.
• D) Y is an inferior good.

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Definitions:

Fixed Expenses

Costs that do not change regardless of the level of production or business activity.

Break-even Sales

The amount of revenue required to cover total fixed and variable costs, resulting in zero profit or loss.

Variable Expenses

Costs that fluctuate with the level of output or sales, such as raw materials and sales commissions.

Fixed Expenses

Costs that remain constant over a period and are not affected by changes in business activity levels.