The Cross Elasticity of Demand for Good a with Respect

question 1

Multiple Choice

The cross elasticity of demand for good A with respect to the price of good B is -1.5.A 10 percent rise in the price of good B will lead to

• A)an increase of 1.5 percent in the quantity of A demanded.
• B)an increase of 15 percent in the quantity of A demanded.
• C)a decrease of 15 percent in the quantity of A demanded.
• D)an increase of 6.7 percent in the quantity of A demanded.
• E)a decrease of 6.7 percent in the quantity of A demanded.

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Definitions:

Dividend Payout Ratio

A financial metric that measures the percentage of earnings paid to shareholders in dividends.

Profit Margin

A financial metric that measures the percentage of revenue that exceeds the cost of goods sold, indicating the efficiency of a company in managing its costs and profit generation.

Retained Earnings

Retained earnings are the portion of a company's profits that are kept or retained within the company rather than paid out to shareholders as dividends, often used for reinvestment in the business or to pay down debt.

Marginal Tax Rate

The rate of tax applied to your next dollar of income, used in progressive tax systems where tax rates increase as income rises.