Suppose Coffee and Cream Are Complementary Goods

question 50

Multiple Choice

Suppose coffee and cream are complementary goods. If the supply of cream falls we would expect the price of coffee to go ________ and the equilibrium quantity of coffee to go ________.

• A)down, down
• B)down, up
• C)up, down
• D)up, up

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Definitions:

Standard Costs

Predetermined or estimated costs of manufacturing, selling, or performing a service, used as targets and benchmarks against actual costs.

Direct Labor Rate Variance

The difference between the actual cost of direct labor and the expected (or standard) cost, based on the standard rate and actual hours worked.

Direct Labor Time Variance

A measure used in cost accounting to analyze the difference between actual hours worked and the standard hours expected for a task.

Standard Costs

Predetermined costs assigned to goods and services, used as targets for performance evaluation.