If a 8 Percent Increase in Income Results in a 10

question 184

Multiple Choice

If a 8 percent increase in income results in a 10 percent increase in the quantity demanded of lattes,what is the income elasticity of demand for lattes,and what type of good is lattes

• A)negative, and therefore lattes is an normal good
• B)negative, and therefore lattes is an inferior good
• C)positive, and therefore lattes is an inferior good
• D)positive, and therefore lattes is a normal good

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Definitions:

Cash

Refers to currency or assets that can rapidly be converted to currency, used by businesses for transactions and considered a current asset on the balance sheet.

Market Rate

The prevailing interest rate available in the marketplace for investments or loans of a similar risk and maturity profile.

Par Value

The face value of a bond or stock, assigned at the time of issuance, representing the minimum amount the security can be sold for.

Semiannual Interest

Interest that is calculated and paid twice a year, often used in the context of bonds and loans.