Related to the Economics in Practice on P

question 189

Multiple Choice

Related to the Economics in Practice on p. 50: The Amazon Kindle and the electronic textbooks available for the Kindle are complementary goods. Electronic textbooks and traditional, hard-copy textbooks are substitute products. If the price of the Kindle decreases,

• A) demand for the Kindle increases and demand for traditional, hard-copy textbooks decreases.
• B) the quantity of Kindles demanded increases and demand for electronic textbooks increases.
• C) demand for the Kindle increases and the quantity of electronic textbooks demanded increases.
• D) the quantity of Kindles demanded increases and the quantity of electronic textbooks demanded increases.

---

Definitions:

Common-sized Financial Statements

Financial statements that present all items in percentage terms. The balance sheet items are presented as a percentage of assets, and income statement items are presented as a percentage of sales.

Industry Averages

Statistical benchmarks that represent the standard or average performance in a particular industry, useful for comparison and analysis.

Solvency

A measure of a company's ability to meet its long-term financial obligations, indicating its financial health.

Current Liabilities

Financial obligations or debts of a business that are due within a year or within its operating cycle if longer.