If the Demand for a Good Is Relatively Inelastic, This

question 283

Multiple Choice

If the demand for a good is relatively inelastic, this means that consumer purchases of the good are

• A) not very sensitive to the price of the good.
• B) highly sensitive to the price of the good.
• C) unrelated to the price of the good.
• D) unaffected by changes in the income level of consumers.

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Definitions:

Risk-Free Rate

The theoretical rate of return on an investment with no risk of financial loss, typically associated with government bonds.

Inflation Rate

The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.

Initial Cost

The amount of money spent to acquire or invest in an asset at the beginning of its life.

Foreign Subsidiary

A foreign subsidiary is a company partly or wholly owned by another company, known as the parent company, and is based in a country other than the one where the parent company is located.