Solve the Problem Using the Elimination Method

question 89

Multiple Choice

Solve the problem using the elimination method.
-A vendor sells hot dogs and bags of potato chips. A customer buys 2 hot dogs and 2 bags of potato chips for $5.00. Another customer buys 4 hot dogs and 3 bags of potato chips for $9.00. Find the cost of each item.

• A) $1.75 for a hot dog; $1.25 for a bag of potato chips
• B) $1.50 for a hot dog; $1.25 for a bag of potato chips
• C) $1.00 for a hot dog; $1.50 for a bag of potato chips
• D) $1.50 for a hot dog; $1.00 for a bag of potato chips

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Definitions:

Intrinsic Value

The perceived or calculated true value of an asset, investment, or company based on fundamental analysis rather than current market price.

Equilibrium

A state in which market supply and demand balance each other, resulting in stable prices and no tendency for change.

Call

An options contract that gives the investor the right, but not the obligation, to buy a stock, bond, commodity, or other instrument at a specified price within a specific time period.

Put

A financial derivative option that gives the holder the right, but not the obligation, to sell a security at a specified price within a specified time.