The Price Elasticity of Demand Is a Units-Free Measure of the Responsiveness

question 32

Multiple Choice

The price elasticity of demand is a units-free measure of the responsiveness of the ________ when all other influences on buying plans remain the same.

• A)quantity demanded to a change in the price of a substitute or complement
• B)quantity demanded to a change in income
• C)quantity demanded of a good to a change in its price
• D)price to a change in quantity demanded
• E)none of the above

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Definitions:

Accounts Receivable Turnover

A financial ratio indicating how many times a company's accounts receivable are collected during a certain period, reflecting its efficiency in extending credit and collecting debts.

Times Interest Earned Ratio

A financial ratio that measures a company's ability to honor its debt payments by comparing its interest expense to its operating income.

Operating Cycle

The duration between the purchase of inventory by a business and the receipt of cash from accounts receivable, indicating the speed at which a company turns inventory into cash.

Equity Multiplier

A financial ratio that measures a company's leverage by comparing its total assets to its total equity.