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:

Contractual Agreement

A contractual agreement is a legally binding contract between two or more parties, outlining the terms and conditions of an arrangement.

Equity Method

An accounting technique used by firms to assess the profits earned by their investments in other companies.

Unrealized Gains and Losses

Increases or decreases in the value of investments that have not been sold, thus not yet resulting in actual profit or loss.

IFRS 11

An International Financial Reporting Standard that deals with accounting for interests in joint arrangements, requiring parties to recognize their rights and obligations.