If the Price of Gasoline Rises, the Price of Automobiles

question 214

True/False

If the price of gasoline rises, the price of automobiles should also rise because gasoline and automobiles are complementary products.

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Definitions:

Selling Price

The amount a customer pays to purchase a product or service from a business.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, due to fixed costs in a company's structure.

Net Income

This is the total profit of a company after all expenses, including taxes and operating costs, have been subtracted from total revenue.

Variable Expenses

Costs that change in proportion to the level of activity or production volume.