Suppose That a 10 Percent Increase in the Price of Normal

question 38

Multiple Choice

Suppose that a 10 percent increase in the price of normal good Y causes a 20 percent increase in the quantity demanded of normal good X. The coefficient of cross elasticity of demand is

• A)negative, and therefore these goods are substitutes.
• B)negative, and therefore these goods are complements.
• C)positive, and therefore these goods are substitutes.
• D)positive, and therefore these goods are complements.

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Definitions:

Interest Days

The number of days over which interest accrues on a loan, deposit, or investment.

Finance Charge

The fee that the seller charges for the privilege of buying on credit.

Previous Balance

The amount of money that was in an account or owed at the end of the last billing cycle.

Cycle Closing

The process of finalizing all transactions at the end of an accounting period to prepare for financial reporting.