If the Cross-Price Elasticity of Demand Between Good X and Good

question 244

Multiple Choice

If the cross-price elasticity of demand between good x and good y is 0.4, then

• A)the demand for good x is highly responsive to changes in the price of good y
• B)a 10 percent increase in the price of good y leads to a 0.4 percent increase in the quantity demanded of good x
• C)a 10 percent decrease in the price of good y leads to a 4 percent decrease in the demand for good y
• D)good x and good y are complements
• E)good x is a normal good and good y is an inferior good

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Definitions:

Denominator Level

In cost accounting, it refers to the level of activity or volume that is used to calculate the fixed cost per unit during a specific period.

Volume Variance

Refers to the difference between the expected volume of production and the actual volume, affecting the budgeted production costs.

Standard Hours

The amount of time expected to complete a task or a project under normal conditions.

Budget Variance

The difference between what was budgeted or planned for an operation and what actually occurred.