The Cross Elasticity of Demand for Pizza with Respect to the Price

question 14

Multiple Choice

The cross elasticity of demand for pizza with respect to the price of a soda is

• A) positive because the goods are complements.
• B) negative because the goods are complements.
• C) positive because the goods are substitutes.
• D) negative because the goods are substitutes.

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Definitions:

Annual Inflation Rate

The percentage increase in the price of goods and services over a one-year period, reflecting the decreasing purchasing power of a currency.

Purchasing Power

The measure of what one unit of currency can buy in terms of goods or services.

Compounded Monthly

The practice of calculating interest on the principal and the accumulated interest each month.

Compounded Semiannually

Interest that is calculated and added to the principal balance twice a year.