Suppose the Price of Butter Increases by 5 Percent and the Amount

question 82

Multiple Choice

Suppose the price of butter increases by 5 percent and the amount of margarine purchased increases by 25 percent. What is the cross-price elasticity of demand between these two goods?

• A) 0.2
• B) 5
• C) 1.0
• D) −5.0

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Definitions:

Turnover

In financial terms, it can also refer to the volume of business conducted over a period of time, such as sales turnover.

Operating Assets

Assets that are utilized in the daily operations of a business to generate revenue, excluding investment and non-operational assets.

Margin

The difference between the selling price of a product or service and its cost, often expressed as a percentage of the selling price.

Operating Assets

Assets used by a company in its day-to-day operations to generate revenue, excluding investments and non-operational assets.