If the Cross Elasticity of Demand for Potato Chips and Pretzels

question 181

Multiple Choice

If the cross elasticity of demand for potato chips and pretzels equals 1.5,

• A)potato chips and pretzels must both be luxury goods.
• B)either potato chips or pretzels must be a luxury good, and both may be luxury goods.
• C)potato chips and pretzels must be substitutes.
• D)potato chips and pretzels must be complements.

Understand the concepts and significance of lines of credit and trade credit in business financing.

Grasp the concept and financial implications of factoring and how it impacts cash flow and credit management.

Identify the conditions and consequences associated with term loans, including restrictive covenants.

Understand the advantages and risks associated with leasing and sale-leaseback arrangements.

---

Definitions:

Shares Outstanding

The total number of shares of a company's stock that are currently owned by all its shareholders, including share blocks held by institutional investors and restricted shares owned by the company's officers and insiders.

Market Price

The current selling or buying price for an asset or service.

NPV

Net Present Value; a calculation used to determine the present value of an investment's future cash flows minus the initial investment cost.

All Cash Deal

A transaction where the payment for a purchase is made entirely with cash without the use of financing or exchanging stock.