When Income Increases from $20,000 to $30,000 the Number of Home

question 30

Multiple Choice

When income increases from $20,000 to $30,000 the number of home delivered pizzas per year increases from 22 to 40.The income elasticity of demand for home delivered pizza equals

• A) 1.45.
• B) 0.69.
• C) 0.58.
• D) 0.40.
• E) 2.86.

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Definitions:

Selling A Call Option

The action of granting someone the right, but not the obligation, to buy a specific amount of the underlying asset at a set price within a specified time frame.

Obligation To Sell

A commitment or requirement to sell an asset or security, often arising from a contractual agreement.

Protective Put

An investment strategy where an investor buys a put option for an asset they own to hedge (protect) against a potential drop in the asset's price.

Riskless Asset

An investment with a certain rate of return and no risk of default, often represented by treasury bills or similar government securities.