A Firm Knows That Mike's Income Elasticity of Demand for Hair

question 91

Multiple Choice

A firm knows that Mike's income elasticity of demand for hair ties is 5 while for Sally it is 0.2. A firm can reason that a hair tie is a(n) good for Mike while it is a(n) good for Sally.

• A) normal; inferior
• B) complement; substitute
• C) necessity; luxury
• D) inferior; normal
• E) luxury; necessity

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Definitions:

Journal Entries

The basic way to record financial transactions in double-entry bookkeeping, involving debits and credits in accounting records.

Dividends

Disbursements issued by a company to its shareholders, typically originating from the firm's earnings.

Fair Value Through Profit or Loss

An accounting approach where financial assets are recorded at their fair value, with changes affecting the profit or loss statement directly.

Market Value

The current price at which an asset can be bought or sold in a public market.