Consumer Surplus Tends to Be Small When

question 22

Multiple Choice

Consumer surplus tends to be small when

• A) demand is price elastic.
• B) supply is price elastic.
• C) demand is price inelastic.
• D) supply is price inelastic.

---

Definitions:

Equivalent Annual Cost

A financial analysis tool used to compare the cost effectiveness of two or more alternatives with different lifespans expressed on an annual basis.

Rate of Return

The gain or loss of an investment over a specified period, expressed as a percentage of the investment's initial cost.

Equivalent Annual Cost

A financial metric used to compare the cost-efficiency of different investments or projects with different lifespans, by calculating their annual costs.

Present Value

The present day value of an anticipated future amount of money or series of cash receipts, calculated with an established rate of return.