If a Good Has a Negative Income Elasticity of Demand

question 119

Multiple Choice

If a good has a negative income elasticity of demand, this indicates that the good is

• A)a substitute with another good.
• B)a complement with another good.
• C)inferior.
• D)normal.

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Definitions:

Horizontal Analysis

A financial analysis technique that compares historical financial data over a series of periods to identify trends and growth patterns.

Gross Profit Ratio

A financial metric indicating the proportion of money left from revenues after accounting for the cost of goods sold, presented as a percentage.

Return on Sales Ratio

A financial metric that measures the efficiency of a company in generating profits from its sales by comparing net income to total sales revenue.

Liquidity

The ease with which assets can be converted into cash without significant loss in value, crucial for meeting immediate and short-term obligations.