11.7

a. The luxury restaurant will be more sensitive to the state of the economy because expense account meals will be curtailed in a recession. Burger Queen meals should be relatively recession-proof.

b. The paint company that sells to the auto producers will be more sensitive to the state of the economy. In a downturn, auto sales fall dramatically as consumers stretch the lives of their cars. In contrast, in a recession, more people "do it themselves," which makes paint sales through small stores more stable and less sensitive to the economy.