Two Brands of Water,Natural Water and Mountain Water,are Close Substitutes

question 275

Multiple Choice

Two brands of water,Natural Water and Mountain Water,are close substitutes.If the price of Mountain Water decreases,the fall in price

• A) shifts the demand curve for Natural Water rightward.
• B) shifts the demand curve for Natural Water leftward.
• C) increases the price of Natural Water.
• D) increases the demand for Mountain Water.
• E) More information is needed to determine if the demand curve for Natural Water shifts rightward or leftward.

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Definitions:

Ending Inventory

Ending inventory is the total value of goods available for sale at the end of an accounting period, calculated as beginning inventory plus purchases minus cost of goods sold.

Conversion Costs

The combined costs of direct labor and manufacturing overhead and conversion costs are used to transform raw materials into finished products.

Equivalent Unit

A concept in cost accounting used to apportion costs to partially completed goods, treating them as a fraction of a fully completed unit.

Process Costing System

An accounting methodology used to allocate costs to units of product in continuous processes or industries where the products are indistinguishable from each other.