If Consumer Purchases of a Good Are Not Very Sensitive

question 194

Multiple Choice

If consumer purchases of a good are not very sensitive to the price of the good, economists say the demand for the good is relatively

• A) inelastic.
• B) elastic.
• C) robust.
• D) inverse.

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Definitions:

Discount Rates

The interest rate that the Federal Reserve or a central bank charges depository institutions on loans they receive, or more broadly, the interest rate used to discount future cash flows to their present value.

Initial Purchase Price

The amount paid to buy a good or service for the first time, not including additional costs like maintenance or insurance.

Present Value

is a financial concept that calculates the current worth of an amount of money that is to be received in the future, taking into account a specific rate of interest.

Cigarette Purchases

The act of buying cigarettes, often analyzed in economics to study the effects of taxes, regulations, and other factors on consumer behavior.