A 10 Percent Increase in the Price of Sugar Reduces

question 224

Multiple Choice

A 10 percent increase in the price of sugar reduces sugar consumption by about 5 percent. The increase causes households to

• A) spend more on sugar.
• B) spend less on sugar.
• C) spend the same on sugar.
• D) consume more goods like coffee and tea that are complements of sugar.

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Definitions:

PE Ratio

The price-to-earnings ratio, a valuation metric that compares a company's stock price to its earnings per share.

Stock Repurchase

A company's buying back of its own shares from the marketplace, which can reduce the number of outstanding shares and potentially increase the stock value.

Stock Dividend

A payment made by a corporation to its shareholders in the form of additional shares, rather than cash.

Earnings Per Share

A company's profit divided by the outstanding shares of its common stock, showing the portion of a company's profit allocated to each share of stock.