Suppose That the Extended Market Demand Curve for Maple Syrup

question 96

Multiple Choice

Suppose that the extended market demand curve for maple syrup can be expressed as , where P_p is the price of pancake batter and I is income. Which of the following is true for this extended market demand?

• A) Pancake batter and maple syrup are substitute goods because the partial derivative of the extended market demand with respect to the price of pancake batter is negative.
• B) Pancake batter and maple syrup are substitute goods because the partial derivative of the extended market demand with respect to the price of pancake batter is positive.
• C) Pancake batter and maple syrup are complement goods because the partial derivative of the extended market demand with respect to the price of pancake batter is positive.
• D) Pancake batter and maple syrup are complement goods because the partial derivative of the extended market demand with respect to the price of pancake batter is negative.

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Definitions:

Accounts Receivable Period

The average number of days that it takes for a company to collect payments owed by its customers after a sale has been made.

Early Payment Discount

An incentive offered by a seller to a buyer for paying a bill before the due date.

Grants Credit

The offering of deferred payment terms or a line of credit to a buyer for the purchase of goods or services.

Cash Increase

An upward movement in a company's cash balance, indicating improved liquidity or additional inflow of money.