Tacos and Pizza Are Substitutes

question 337

Multiple Choice

Tacos and pizza are substitutes.If a 2 percent change in the price of a taco leads to a 4 percent change in the demand for pizza,the cross elasticity of demand equals

• A) -1/2.
• B) 1/2.
• C) 2.
• D) -2.
• E) 4.

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Definitions:

Direct Labor

The expenditure on the pay of staff who are directly participating in the creation of products or services.

Factory Overhead Cost

Expenses related to the production process that are not directly tied to a specific product, including costs for utilities, maintenance, and factory equipment depreciation.

Depreciation

The accounting method of allocating the cost of a tangible asset over its useful life.

Sales Commissions

Payments made to sales employees or agents based on the sales volume they achieve.