Suppose That the Cross Price Elasticity of Demand Between Goods

question 299

Multiple Choice

Suppose that the cross price elasticity of demand between goods A and B equals 1.5. Which of the following is TRUE?

• A) A and B are complements because the cross price elasticity is greater than one.
• B) A and B are complements because the cross price elasticity is positive.
• C) A and B are substitutes because the cross price elasticity is greater than one.
• D) A and B are substitutes because the cross price elasticity is positive.

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Definitions:

Journal Entry

A record in the accounting ledger that represents a transaction and its effect on various accounts, used for tracking and organizing financial data.

Accrual

Accrual is an accounting method that records revenues and expenses when they are earned or incurred, regardless of when the cash transaction actually takes place.

Adjusting Journal Entry

An accounting entry made in the general ledger at the end of an accounting period to record any unrecognized income or expenses for the period.

Accrual

The recognition of revenue or expenses that have been earned or incurred but not yet recorded or paid, following the accrual basis of accounting.