If a Small Percentage Increase in the Price of a Good

question 39

Multiple Choice

If a small percentage increase in the price of a good greatly reduces the quantity demanded for that good, the demand for that good is

• A) income inelastic.
• B) price inelastic.
• C) price elastic.
• D) unit price elastic.
• E) income elastic.

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Definitions:

Compounded Monthly

Describes an interest calculation method where interest is added to the principal sum of a deposit or loan each month, leading to interest on interest.

Annuity

A financial instrument designed to distribute a steady series of disbursements to a person, commonly utilized as a source of income during retirement.

Amortize

To amortize is to gradually reduce or write off the cost or value of an intangible asset through systematic charges to income over its estimated useful life.

Compounded Monthly

A method of calculating interest where the interest earned or paid is added to the principal so that the next interest calculation includes prior interest.