We Say That Goods Are Substitutes When They

question 28

Multiple Choice

We say that goods are substitutes when they:

• A) serve similar-enough purposes that a consumer might purchase one in place of the other.
• B) are consumed together, so that purchasing one will make a consumer more likely to purchase the other.
• C) can replace something consumers typically purchase at a significantly lower price.
• D) change a consumer's preferences for a good or service.

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Definitions:

Inventory Shrinkage

Loss of products between purchase from a supplier and sale, often due to theft, damage, or errors.

Adjusting Entry

A journal entry made at the end of an accounting period to allocate income and expenditure to the appropriate periods.

Periodic Inventory System

A method of inventory valuation for financial reporting purposes where a physical count of inventory is performed at specific intervals, and cost of goods sold is calculated at the end of the accounting period.

Merchandise Purchased

The total cost of goods bought for resale during a specific accounting period.