If Tastes for a Good Decreased and the Price of a Substitute

question 50

Multiple Choice

If tastes for a good decreased and the price of a substitute good decreased at the same time, as a result:

• A)​prices would rise.
• B)​prices would fall.
• C)​larger quantities to be exchanged.
• D)​we would not know which direction either prices or quantities exchanged would be altered without more information.

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Definitions:

Statistical Evidence

Data collected and analyzed for the purpose of supporting a conclusion or hypothesis.

Step-Variable Cost

The cost of a resource that is obtained in large chunks and that increases and decreases only in response to fairly wide changes in activity.

Contribution Margin

It is the difference between the sales revenue of a product and its variable costs. The contribution margin represents the portion of sales revenue that is not consumed by variable costs.

Behaviour

The actions or reactions of a person or system in response to external or internal stimuli.