If a Good Has a Negative Income Elasticity of Demand

question 119

Multiple Choice

If a good has a negative income elasticity of demand, this indicates that the good is

• A)a substitute with another good.
• B)a complement with another good.
• C)inferior.
• D)normal.

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Definitions:

Strike Price

The price at which the holder of an option contract can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset or security.

Option Price

The price at which the holder of an option can buy (in the case of a call option) or sell (in case of a put option) the underlying asset.

Put Option Contracts

A financial instrument that gives the holder the right, but not the obligation, to sell a specified amount of an underlying security at a predetermined price within a specified time frame.

Exercise Price

The specified price at which the holder of an option can buy (in the case of a call option) or sell (in the case of a put option) the underlying security or commodity.