When Price Changes, the Effect on Quantity Demanded Is Larger

question 164

Multiple Choice

When price changes, the effect on quantity demanded is larger as time passes at least partly because

• A)people are better able to search out alternatives in the long run.
• B)government regulations affect the short run but not the long run.
• C)consumers are irrational in the short run.
• D)fewer people consume in the long run than in the short run.
• E)most consumers do not realize price has changed in the short run.

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Definitions:

Common Stock

Equity ownership in a corporation, with voting rights and the potential for dividends.

Retained Earnings

The part of net profits not allocated for dividend distribution but held back by the firm for the purposes of reinvesting in its main business or settling debts.

Dividends Paid

The portion of a company's earnings that is distributed to its shareholders as a payment, typically in the form of cash or additional shares.

Statement of Stockholders' Equity

A financial document that shows changes in the value of shareholders' equity in the company over a specific period.