As the Owner of a Kayak Tour Business Was Looking

question 217

Multiple Choice

As the owner of a kayak tour business was looking over her financial records, she noticed that when the shop down the street increased the price of stand-up paddleboard tours by 10%, kayak tour sales increased by 15%. Which of these is a TRUE statement?

• A) The cross elasticity of demand would be 15%/10% = 1.5, implying that the products are substitutes.
• B) The income elasticity of demand would be 15%/10% = 1.5, implying that the products are normal goods.
• C) The cross elasticity of demand would be 10%/15% = 0.67, implying that the products are substitutes.
• D) The income elasticity of demand would be 10%/15% = 0.67, implying that the products are normal goods.

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Definitions:

High Perceived Value

The extent to which a product or service is regarded by a consumer as being worthy or beneficial, often relative to its cost.

Price

Price is the amount of money expected, required, or given in exchange for something else, such as a product or service.

Prestige

The reputation or high standing of something or someone, often acquired through quality, achievements, or exclusivity.

Quality

The standard of something measured against other things of a similar kind; the degree of excellence of something.