Latest AICPA CPA-Business Practice Questions BY Gilliam

Choice 'd' is correct. Complementary goods are ones whose demand fluctuates together. If Good A and Good B are complements, then if the demand for Good A increases, the demand for Good B will also increase, tennis rackets and tennis balls are complements.

Choice 'a' is incorrect. For substitutive goods, as the price of one of the goods increases, the other good experiences an increase in demand as it is substituted for the first good. An example of substitute goods is apple and orange juice.

Choice 'b' is incorrect. Independent goods have demand functions that are not interrelated. An example would be bread and vacuum cleaners.

Choice 'c' is incorrect. Inferior goods experience a decrease in demand when income levels rise. An example is hamburger, which experiences decrease in demand as incomes rise and buyers switch to higher priced meats.

Choice 'a' is correct.

Choices 'b', 'c', and 'd' are incorrect based on the above Explanation:.