If a Lower Price for a Pepsi Decreases the Demand

question 134

Multiple Choice

If a lower price for a Pepsi decreases the demand for a Coke,the cross elasticity value for Pepsi and Coke is

• A) definitely negative.
• B) definitely equal to zero.
• C) definitely positive.
• D) definitely greater than one.
• E) possibly negative, positive, or zero, but there is not enough information to decide.

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Definitions:

Liquidity

A measure of how easily assets can be converted into cash without significant loss in value, important for meeting short-term obligations.

Liquidity

The ease with which an asset can be converted into cash without affecting its market price.

Receivables Turnover

A financial ratio that measures how efficiently a company collects debt from its credit sales, calculated by dividing net credit sales by the average accounts receivable.

Inventory Turnover Ratio

A measure of how quickly a company sells its inventory within a given period, calculated by dividing the cost of goods sold by the average inventory.