If the Cross-Price Elasticity of Demand Is 1

question 52

Multiple Choice

If the cross-price elasticity of demand is 1.25, then the two goods are:

• A)complements
• B)luxuries
• C)normal goods
• D)substitutes

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Definitions:

Inflation Risk

The risk that the value of assets or income will be eroded as inflation diminishes the value of a country’s currency.

Firm-Based Risk

Refers to the potential for financial loss arising from factors unique to a specific company, such as management decisions, product demand, or operational efficiency.

Market-Based Risk

The risk of losses stemming from factors that affect the overall market, including fluctuations in interest rates, stock prices, and currencies.

Investment Risk

The possibility of losing some or all of the original investment, often measured by the volatility of returns.