Suppose the Price of a Increases by 10 Percent While

question 45

Multiple Choice

Suppose the price of A increases by 10 percent while the quantity demanded of B does NOT change. We would conclude that

• A) the two goods are substitutes, but the cross elasticity of demand is not large.
• B) the two goods are complements, but the cross elasticity of demand is not large.
• C) the two goods are perfect substitutes.
• D) the two goods are not related.

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Definitions:

Specific Identification

An inventory costing method in which costs are assigned to individual items or batches of items, not to inventory as a whole.

Cost of Goods Sold

This refers to the aggregate expense involved in creating a product that a company sells, including direct labor, material costs, and direct factory overhead.

Ending Inventory

The total value of unsold goods that a company has in stock at the end of an accounting period.

LIFO Method

The Last-In, First-Out (LIFO) Method is an inventory valuation approach where the last items added to inventory are assumed to be the first sold, affecting the cost of goods sold and inventory valuation on financial statements.