A Newspaper Typically Consumes a Smaller Fraction of a Consumer's

question 65

Multiple Choice

A newspaper typically consumes a smaller fraction of a consumer's budget than a home entertainment system.Therefore, you would expect the demand for:

• A) a home entertainment system to be more price elastic.
• B) a home entertainment system to be more price inelastic.
• C) newspapers to be more price elastic.
• D) both to be equally price elastic.

---

Definitions:

Cash Flows

The total amount of money being transferred into and out of a business, particularly in the context of operating, investing, and financing activities.

Discounted

A reduced price from the standard cost of goods or services, often used as a sales promotion.

Rate of Return

The gain or loss on an investment over a specified period, expressed as a percentage of the investment's initial cost.

Discounted Cash Flow (DCF) Analysis

A financial valuation method used to estimate the value of an investment based on its expected future cash flows, adjusted for time value of money.