Considering the Concept of Cross-Price Elasticity,if Two Goods Are Substitutes

question 74

Multiple Choice

Considering the concept of cross-price elasticity,if two goods are substitutes:

• A) an increase in the price of one causes a decrease in the demand for the other.
• B) a decrease in the price of one causes an increase in the demand of the other.
• C) an increase in the price of one causes an increase in the demand for the other.
• D) the cross-price elasticity is negative.

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Definitions:

Payback Periods

The amount of time it takes for an investment to generate cash flows sufficient to recover its initial cost.

Investments

Items or resources purchased with the intention of earning income or increasing in value as time goes on.

Short Payback Period

A time frame in which an investment is expected to be recovered quickly, indicating potential attractiveness.

Revenue

The cumulative earnings generated by a business from sales of products or offering of services over a designated period.