Under Which of the Following Conditions Is a Product Most

question 142

Multiple Choice

Under which of the following conditions is a product most likely to have an elastic demand?

• A) Consumers can easily find close substitutes for the product.
• B) The marginal cost of producing the product is equal to its marginal revenue.
• C) A large portion of a person's budget is spent on the product.
• D) The fixed costs associated with producing the product are higher than the variable costs associated with it.

---

Definitions:

NPV

Net Present Value is a method used in capital budgeting to evaluate the profitability of an investment or project by calculating the difference between the present value of cash inflows and the present value of cash outflows.

Contracts

Legal agreements between two or more parties that are enforceable by law, outlining responsibilities, duties, and sharing of benefits.

IRR

Internal Rate of Return; the discount rate that makes the net present value of all cash flows from a particular project zero.

Cash Flow

The net amount of cash and cash-equivalents being transferred into and out of a business.