Explain whether KB Homes' sales are likely to fluctuate more or less than the sales of each of the following firms as the economy moves from recession to expansion and back to recession
Whirlpool Corporation (appliance manufacturer)
Taco Bell
The Boeing Company (aircraft manufacturer)
GameStop (video game sales and rentals)
What will be an ideal response?
KB Homes' sales are likely to fluctuate during the business cycle as much or more than the sales of Whirlpool and Boeing, but definitely more than the sales of Taco Bell and GameStop. Like new homes, appliances and aircraft are expensive durable goods that are sensitive to changes in economic conditions. On the other hand, fast food and video games are relatively inexpensive consumer goods that are relatively less sensitive to changes in economic conditions.
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