Linesha, a College Student Working Part-Time, Receives a Wage Increase

question 90

Multiple Choice

Linesha, a college student working part-time, receives a wage increase. An avid movie buff, she increased her purchases of Blu-ray discs and reduced her purchases of DVDs. Based on this information,

• A) DVDs and Blu-ray discs are substitutes.
• B) Blu-ray discs are normal goods and DVDs are inferior goods.
• C) DVDs and Blu-ray discs are normal goods.
• D) the cross-price elasticity between DVDs and Blu-ray discs is negative.

---

Definitions:

Debt-to-equity Ratio

An indicator showing the comparative levels of shareholders' equity and debt utilized in the financing of a company's assets.

Times Interest

A financial ratio that measures a company's ability to meet its interest obligations, calculated by dividing earnings before interest and taxes (EBIT) by the interest expenses.

Equity Multiplier

A financial leverage ratio that measures the portion of a company’s assets that are financed by stockholders’ equity, indicating the level of debt used to finance assets.

Current Ratio

An indicator of a company's proficiency in paying off its short-term dues using the assets it currently possesses.