A Positive Income Elasticity of Demand Coefficient Indicates That

question 21

Multiple Choice

A positive income elasticity of demand coefficient indicates that:

• A) a product is an inferior good.
• B) a product is a normal good.
• C) two products are substitute goods.
• D) two products are complementary goods.

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Definitions:

Operating Expenses

Costs associated with running a business's day-to-day activities, excluding the cost of goods sold, such as rent, utilities, and payroll.

Liquidity Ratio

A financial metric used to determine a company's ability to pay off its short-term liabilities with its most liquid assets.

Inventory Turnover

This is a ratio showing how many times a company's inventory is sold and replaced over a period, usually a year, indicating the efficiency of inventory management.

Current Ratio

A liquidity ratio that measures a company's ability to cover its short-term obligations with its current assets.