If the Price of a Cinema Ticket Rises 3 Per

question 47

Multiple Choice

If the price of a cinema ticket rises 3 per cent and, as a result, the quantity demanded of DVD rentals increases 6 per cent, then the cross elasticity of demand is

• A) 2.
• B) 9.
• C) 1/2.
• D) -2.
• E) -1/2.

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Definitions:

Setup Cost

The expenses incurred in preparing equipment or processes for manufacturing an order or batch of products.

Annual Demand

The total quantity of a product or service that consumers are willing and able to purchase over a year.

Safety Stock

Additional quantity of an item held in inventory to reduce the risk of stockouts caused by variability in supply or demand.

Stockouts

Occurrences when demand exceeds supply, resulting in an inability to fulfill customer orders or requirements immediately.