Suppose You Are Shown Two Intersecting Demand Curves That Are

question 77

Multiple Choice

Suppose you are shown two intersecting demand curves that are drawn on the same scale. At the point of intersection, one of the demand curves is steeper than the other. Which of the following could explain the difference in slopes?

• A) It is not possible to compare the slopes of different demand curves.
• B) The flatter one is for a good with no close substitutes.
• C) The steeper one has a higher income elasticity of demand.
• D) The steeper one applies for the short run whereas the flatter one applies for the long run.
• E) The steeper one is probably the demand curve for a luxury good.

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Definitions:

Gross Profit

The difference between revenue and the cost of goods sold, indicating the financial performance of a company's core business activities.

Beginning Inventory

The value of a company’s inventory at the start of an accounting period, crucial for calculating cost of goods sold during the period.

ASPE

Accounting Standards for Private Enterprises; a set of accounting practices, frameworks, and guidelines designed specifically for private companies in Canada.

Merchandise Return

Merchandise Return is the process by which a customer returns previously purchased goods back to the seller, typically due to issues like defects or dissatisfaction.