When Product a Is a Good Substitute for Product B,the

question 66

Multiple Choice

When product A is a good substitute for product B,the cross-price elasticity of demand for products A and B will be _____.

• A)unity
• B)negative
• C)positive
• D)decreasing
• E)increasing

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Definitions:

Enforcing Private Agreements

The legal process through which private contracts or understandings between parties are made obligatory and are upheld by law.

Declaration

A formal or explicit statement or announcement.

Consideration

Generally, the value given in return for a promise or a performance. The consideration, which must be present to make the contract legally binding, must be something of legally sufficient value and must be bargained for.

Objective Theory

A principle that states the intention of parties in a contract is determined by their outward expressions and acts, rather than by their subjective intentions.