If Two Goods Have a Cross Elasticity of Demand of -2,then

question 316

Multiple Choice

If two goods have a cross elasticity of demand of -2,then when the price of one good increases,the demand curve of the other good

• A) shifts rightward.
• B) shifts leftward.
• C) remains unchanged and the supply curve also remains unchanged.
• D) might shift rightward, leftward, or remain unchanged.
• E) remains unchanged but the supply curve shifts leftward.

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Definitions:

Borrowing Risk

The potential danger that borrowers might not be able to repay their loans or meet other financial obligations, leading to financial loss for the lender.

Accrued Interest

Interest that has been incurred but not yet paid at the end of a period.

Adjusting Entry

An accounting record made to update the financial statements to reflect transactions that have occurred but are not yet recorded.

Interest Expense

The cost incurred by an entity for borrowed funds, usually presented as an expense in the income statement.