If Cola and Iced Tea Are Good Substitutes for Consumers

question 14

Multiple Choice

If cola and iced tea are good substitutes for consumers, what can we conclude about their elasticity from this information?

• A) Their cross-price elasticities are greater than zero.
• B) Their income elasticities are less than zero.
• C) Their price elasticities of supply are less than one.
• D) Their price elasticities of demand are less than one.

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Definitions:

Receivable

Amounts of money owed to a company by customers or clients for goods or services delivered but not yet paid for.

Average Collection Period

The average collection period is the average number of days it takes for a business to receive payments owed by its customers for sales made on credit.

Accounts Receivable

Funds that are owed to a company by its customers for products or services provided on credit.

Note Receivable

A written promise that one party will receive a certain amount of money from another party at a future date, categorized as an asset.