-In the Above Figure, the Demand Curve for Good a Shifts

question 46

Multiple Choice

-In the above figure, the demand curve for Good A shifts from D1 to D2 in Graph A when the price of Good B changes from P1 to P2 in Graph B. We can conclude that

• A) Good A and Good B are substitutes.
• B) Good A and Good B are complements.
• C) Good A is a normal good but Good B is an inferior good.
• D) Good A and Good B are unrelated.

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Definitions:

Constant Dividend Growth Model

A method to estimate the value of a company's stock, assuming that its dividends grow at a constant rate indefinitely.

Dividend Growth Rate

The annualized percentage rate of growth of a company's dividend payments.

Market Value

The current price at which an asset or service can be bought or sold, determined by supply and demand in the marketplace.

Required Return

The minimum expected return by investors for providing capital to a particular investment, taking into account the risk level.