When Two Goods Are Unrelated

question 172

Multiple Choice

When two goods are unrelated,

• A) the demands for both goods will be inelastic.
• B) cross price elasticity of demand will be 0.
• C) cross price elasticity of demand will be negative.
• D) cross price elasticity of demand will be positive.

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Definitions:

Capital Budgeting

The process businesses use to evaluate and select long-term investments such as new machinery, replacement machinery, new plants, new products, and research development projects.

Time Value

The concept that money available at the present time is worth more than the identical sum in the future due to its potential earning capacity.

Soft Capital Rationing

Internal limitations set by a company's management on the amount of funding allocated for new projects.

Debt Covenants

Agreements between a borrower and lender that stipulate certain conditions the borrower must adhere to, which can pertain to financial ratios, levels of income, or other financial benchmarks.