Suppose That When Your Wealth Increases from $100,000 to $200,000

question 11

Multiple Choice

Suppose that when your wealth increases from $100,000 to $200,000, your holdings of savings deposits increase from $10,000 to $12,000. Your wealth elasticity of demand for savings deposits then is

• A)less than 1 and savings deposits are a necessity asset.
• B)greater than 1 and savings deposits are a necessity asset.
• C)less than 1 and savings deposits are a luxury asset.
• D)greater than 1 and savings deposits are a luxury asset.

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Definitions:

Retailer-sponsored Cooperative

A group of retailers that pool their resources together for joint purchasing, marketing, or other business operations to increase competitive advantage.

Wholesaler-sponsored Voluntary Chain

A form of retail organization in which independent retailers band together in a contractual relationship with a wholesaler to achieve economies of scale and compete with larger chains.

Administered Cooperative System

A cooperative arrangement where operations and activities are managed and directed by a centralized authority, often to achieve economies of scale or shared goals.

Franchising

A business model where a franchisor licenses its trade name and operating methods to a franchisee in exchange for a fee and ongoing royalties.