A Cross-Price Elasticity of -1

question 131

Multiple Choice

A cross-price elasticity of -1.2 indicates the two goods are

• A) inferior.
• B) elastic.
• C) complements.
• D) substitutes.
• E) normal.

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Definitions:

Time Value

The idea that money currently in hand is valued higher than an identical sum to be received in the future because of its ability to generate earnings.

Present Value

The present value of a sum of money to be received in the future, or a series of future cash flows, calculated using an agreed-upon rate of return.

Earnings Rate

The rate at which a company or investment generates income, typically expressed as a percentage of the investment or capital.

Compound Interest

Interest calculated on the initial principal and also on the accumulated interest from previous periods.