If a 1 Percent Decrease in the Price of Product

question 214

Multiple Choice

If a 1 percent decrease in the price of product A brings about a 3 percent increase in the sales of product B, then:

• A) products A and B are complementary.
• B) the cross elasticity of demand between these two products is positive.
• C) products A and B are substitutes.
• D) the demand for these products is inelastic.
• E) the total revenue earned from product A will decrease.

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Definitions:

Major Classes

Categories or groups into which business assets, liabilities, equity, income, and expenses are divided for organizational and reporting purposes.

20-Year Period

Denotes a time frame of twenty years, often used in the context of loans, investments, or planning horizons.

Book Value

The net value of a company's assets minus its liabilities, often in relation to an individual asset or the company as a whole.

Plant Assets

Long-term tangible assets used in the operation of a business and not expected to be converted to cash in the short term.