The Most Plausible Reason Why Changes in the Price of Cotton

question 411

Multiple Choice

The most plausible reason why changes in the price of cotton can cause shifts in the supply curve for tobacco is:

• A) cigarette smokers often wear cotton shirts.
• B) when incomes rise, people consume more cotton and tobacco.
• C) firms can switch from growing tobacco to cotton and vice versa.
• D) tobacco is an input in the production of cotton.
• E) cotton and tobacco are unrelated markets in all ways.

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Definitions:

Static Planning Budget

A budget based on a single level of output, not adjusted for changes in activity levels.

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity levels, allowing for better budget-to-actual comparisons.

Favorable Spending Variance

A situation in which actual spending is less than the budgeted or projected amount, indicating cost efficiency.

Actual Cost

The real cost incurred in the production of goods or services, including all direct and indirect expenses.