-Refer to the Above Figure

question 437

Multiple Choice

-Refer to the above figure. Suppose that Cheerios and Apple Jacks are substitutes. Which diagram shows the effect on the demand for Cheerios when the price of Apple Jacks cereal has decreased?

• A) A
• B) B
• C) neither graph
• D) both graphs

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Definitions:

Merchandising Firms

Companies that purchase goods at wholesale prices and resell them at retail prices, making a profit on the spread.

Manufacturing Firms

Companies that produce finished goods from raw materials through the use of labor, machinery, and equipment.

Merchandising Firms

Companies that purchase inventory in a finished form for the purpose of reselling it to consumers without further processing.

Manufacturing Firms

Companies engaged in the transformation of raw materials into finished products through the use of labor, tools, machinery, and chemical processing.