The Price Elasticity of Demand Is a Units-Free Measure of the Responsiveness

question 120

Multiple Choice

The price elasticity of demand is a units-free measure of the responsiveness of the ________ when all other influences on buying plans remain the same.

• A)quantity demanded of a good to a change in the price of a substitute or complement
• B)quantity demanded of a good to a change in income
• C)quantity demanded of a good to a change in its price
• D)price to a change in the quantity demanded of a good
• E)quantity demanded of a good to a change in supply

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Definitions:

Cash Outlay

The actual amount of money spent by a company to purchase goods or services, as opposed to accounting estimates or accruals.

Alternative Investments

Assets that do not fall into the conventional investment categories such as stocks, bonds, and cash, examples include real estate, commodities, and hedge funds.

Opportunity Cost

The loss of potential gain from other alternatives when one alternative is chosen.

Differential Income

The difference in income between two alternatives, used in decision-making processes to determine the best option.