The Income Elasticity of Demand

question 6

Multiple Choice

The income elasticity of demand

• A)is usually zero because "you can only have so much."
• B)could be positive or negative or zero, depending on the nature of the good.
• C)can never be zero.
• D)must be positive because consumers tend to buy more at higher incomes.
• E)must be negative because of the law of increasing cost.

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Definitions:

Shares Outstanding

The total number of shares of a company's stock that are currently owned by all its shareholders, including share blocks held by institutional investors and restricted shares owned by the company's officers and insiders.

Market Price

The current selling or buying price for an asset or service.

NPV

Net Present Value; a calculation used to determine the present value of an investment's future cash flows minus the initial investment cost.

All Cash Deal

A transaction where the payment for a purchase is made entirely with cash without the use of financing or exchanging stock.