Assume That as the Price of Good X Rises,the Demand

question 41

Multiple Choice

Assume that as the price of good X rises,the demand for good Z shifts outward.On the basis of this information we can conclude that:

• A)good Z is inferior.
• B)goods X and Z are complements.
• C)goods X and Z are substitutes.
• D)good X is an input used in the production of Z.

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Definitions:

Price-Earnings Ratio

A valuation metric for stocks, calculated by dividing the current market price of a share by its earnings per share (EPS).

Dividend Payout Ratio

The ratio of the total dividends declared by a company to its net income, showing what portion of earnings is paid out as dividends.

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term financial health and operational efficiency of the business.

Current Ratio

An indicator of how well a company can satisfy its obligations due within a short period, calculated by taking current assets and dividing them by current liabilities.