In Which of the Following Situations Is the Absolute Price

question 268

Multiple Choice

In which of the following situations is the absolute price elasticity of demand for an item most likely to exceed a value of 1?

• A) when there are very few close substitutes for the item
• B) when there are very few producers of the item
• C) when the item's share of expenses in consumers' budgets is very small
• D) when there is considerable time to adjust to a change in the price of the item

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Definitions:

Term Auction Facility

A monetary policy tool used by the Federal Reserve to provide short-term loans to banks, aiming to improve liquidity and stability in financial markets.

Bank Insolvency

A situation where a bank's liabilities exceed its assets, making it unable to meet its obligations and continue its operations.

Excess Reserves

Banks' reserves that exceed the minimum requirement set by a central bank, not lent out and often kept for emergency purposes.

Reserve Requirement

The minimum amount of reserves that banks must hold against deposits, as mandated by central banks.