If Cross-Price Elasticity of Demand Between Two Goods Is Positive

question 147

Multiple Choice

If cross-price elasticity of demand between two goods is positive, the two goods are:

• A)substitutes.
• B)inferior.
• C)complements.
• D)normal.

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Definitions:

PE Ratio

Price-to-Earnings Ratio; a valuation measure for a company comparing its current share price to its per-share earnings.

Yield %

The income return on an investment, such as the interest or dividends received, expressed as a percentage of the investment's cost or value.

Default Risk Premium

The additional yield that investors require to invest in bonds that have a risk of default, compared to risk-free bonds.

Liquidity Risk Premium

The extra yield or return that investors demand for holding a security that may not be easily sold or converted into cash without a significant loss in value.