If a 1 Percent Decrease in the Price of Product

question 129

Multiple Choice

If a 1 percent decrease in the price of product A brings about a 3 percent increase in the sales of product B, then:

• A) products A and B are complementary.
• B) the cross elasticity of demand between these two products is positive.
• C) products A and B are substitutes.
• D) the demand for these products is inelastic.

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Definitions:

Probabilities

The measure of the likelihood that an event will occur, often expressed as a number between 0 and 1.

Nonprogrammed Decision

A decision made in response to situations that are unique, relatively unstructured, and undefined, often requiring creative problem-solving.

New Market

Refers to either a completely unexplored market sector or geographic area where a product, service, or business can expand.

Certain Environment

A specific or defined setting or context in which activities or operations occur.