The More Broadly a Good Is Defined

question 76

Multiple Choice

The more broadly a good is defined

• A)the more substitutes it has, so demand will be more price-elastic
• B)the less substitutes it has, so demand will be more price-elastic
• C)the more substitutes it has, so demand will be less price-elastic
• D)the less substitutes it has, so demand will be less price-elastic
• E)has no effect on the good's price elasticity of demand

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Definitions:

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the degree to which a company can leverage fixed costs.

Capital Intensive

Refers to industries or businesses that require large amounts of money to buy, maintain, or improve their assets such as property, plants, and equipment.

Variable Costs

Costs associated with a business that fluctuate according to operational levels.

Operating Leverage

The degree to which a firm or project can increase operating income by increasing revenue, highlighting the effects of fixed costs.