The Price of Good B Increases by 4 Percent, Causing

question 271

Multiple Choice

The price of Good B increases by 4 percent, causing the quantity demanded of Good A to decrease by 6 percent. The cross-price elasticity of demand is ________, and the goods are ________.

• A) 1.5; substitutes
• B) -1.5; complements
• C) 0.67; complements
• D) -0.67; substitutes

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Definitions:

Sales Revenues

Income received from selling goods or services over a period of time before any costs or expenses are deducted.

Capital Cost Allowance

A form of tax depreciation that allows businesses in Canada to deduct the cost of a depreciable property over several years.

Cash Operating Costs

Expenses associated with the day-to-day operations of a business that are paid out in cash.

Tax Rate

The percentage at which an individual or corporation is taxed by a government entity.