If a 20 Percent Increase in the Price of One

question 84

Multiple Choice

If a 20 percent increase in the price of one good leads to a decrease of 10 percent in the demand for another good, the goods are:

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

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Definitions:

Creditor Beneficiary

A third party that benefits from a contract made between two other parties, primarily involving debt repayment.

Life Insurance Policy

A contract between an insurer and an insured, where the insurer promises to pay a designated beneficiary a sum of money upon the death of the insured person.

Bank

A financial institution licensed to receive deposits, offer loans, and provide various financial services to individuals and businesses.

Novation

The act of replacing an old contract with a new one, substituting a new party into an existing agreement.