Suppose That a Local Supermarket Sells Apples and Oranges for 50

question 141

Multiple Choice

Suppose that a local supermarket sells apples and oranges for 50 cents apiece,and at these prices is able to sell 100 apples and 200 oranges per week.One week,the supermarket lowered the price per apple to 40 cents and sold 120 apples.The next week,they lowered the price per orange to 40 cents (after raising the price per apple back to 50 cents) and sold 240 oranges.These results imply that the

• A)price elasticity of apples is lower than the price elasticity of oranges
• B)price elasticity of apples is higher than the price elasticity of oranges
• C)demand for apples is more price sensitive than the demand for oranges
• D)demand for oranges is more price sensitive than the demand for apples
• E)price elasticities of demand for apples and oranges are the same over these price ranges

---

Definitions:

Trust Receipt

An instrument acknowledging that the borrower holds certain goods in trust for the lender.

General Security Agreement

A legal document that secures repayment by granting the lender a security interest in a range of the borrower's assets.

Short-Term Financing

Short-term financing involves borrowing funds to meet immediate business needs for a period typically less than a year.

Cyclical

Refers to businesses or stocks that are heavily affected by economic changes, often experiencing higher growth in positive economic conditions and contractions during downturns.