If the Price of Potato Chips Rises and the Demand

question 83

Multiple Choice

If the price of potato chips rises and the demand for pretzels rises,then potato chips and pretzels are:

• A) Substitutes.
• B) Complements.
• C) Price inelastic goods.
• D) Price elastic goods.

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Definitions:

Sales Price

The amount of money for which a product or service is sold to the customer.

Contribution Margin

The amount by which sales revenue exceeds variable costs, contributing to covering fixed costs and profit generation.

Fixed Costs

Expenses that do not change with the level of production or sales activities within a short time frame, such as rent, salaries, and insurance.

Variable Cost

Charges that adjust in accordance with the quantity of production or the scale of sales.