Scenario 5-1 Suppose That When the Average College Student's Income Is $10,000

question 7

Multiple Choice

Scenario 5-1
Suppose that when the average college student's income is $10,000 per year,the annual quantity demanded of Patty's Pizza is 50 and the annual quantity demanded of Sue's Subs is 80.Suppose that when the price of Patty's Pizza increases from $8 to $10 per pie,the quantity demanded of Sue's Subs increases from 80 to 100.Suppose also that when the average student's income increases to $12,000 per year,the annual quantity demanded of Patty's Pizza increases from 50 to 60.
-Refer to Scenario 5-1.Using the midpoint method,the cross price elasticity of demand is

• A)about 0.22,and the two goods are substitutes.
• B)about -0.005,and the two goods are complements.
• C)1,and the two goods are substitutes.
• D)1,and the two goods are unitary elastic.

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Definitions:

Guarantor

A person or entity that agrees to be responsible for another's debt or performance under a contract if the original party defaults.

Debtor's Obligation

A debtor's legal responsibility to repay a debt as agreed upon with the creditor.

Mechanic's Lien

A legal claim on a property's title to protect those who have provided work or materials that enhance the property's value.

Artisan's Lien

A legal claim granted to craftsmen or workers on the property they have repaired, built, or improved, ensuring payment for their services.