When the Price of Pens Went from $1 to $1

question 243

Multiple Choice

When the price of pens went from $1 to $1.50, the quantity demanded of pencils changed from 50 to 75 a day. The cross-price elasticity of demand for pens using the initial value formula) is:

• A)0.8.
• B)0.4.
• C)0.2.
• D)Cannot be determined from the information provided.

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Definitions:

Interest

The cost of borrowing money or the payment received for the investment of money, typically expressed as a percentage of the principal.

Maturity Value

Maturity Value is the amount payable to an investor at the maturity date of a financial instrument, typically including the principal and the interest.

Note Receivable

A written promise to pay a specified amount, usually interest-bearing, that is recognized as an asset on the lender's balance sheet.

Promissory Notes

Written promises to pay a specified sum of money to a certain person or entity at a defined time or on demand.