If Tea and Coffee Are Substitutes, the Cross Elasticity of Coffee

question 375

Multiple Choice

If tea and coffee are substitutes, the cross elasticity of coffee with respect to the price of tea will be ________ and an increase in the price of tea will ________ the demand for coffee.

• A) positive; increase
• B) negative; decrease
• C) negative; increase
• D) positive; decrease

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Definitions:

Net Income

Net income represents the total earnings of a company after subtracting all expenses, taxes, and costs from its total revenue, indicating the actual profit made during a specified period.

Total Assets

The sum of all resources owned by a company, valued in monetary terms, which includes tangible and intangible items.

Owner's Equity

The amount of assets owned by a business's owner after all liabilities have been deducted.

Average Inventory

The mean amount of inventory a business holds over a certain period of time, calculated to understand inventory levels and turnover.