As New Products That Are Better Than the Existing Generation

question 33

Multiple Choice

As new products that are better than the existing generation of products are introduced, sales normally increase because the new products provide consumers increased value or worth. This process, which is called ________, stimulates economic activity, which is a good thing for the economy.

• A) creative destruction
• B) repetitive destruction
• C) iterative replacement
• D) inventive replacement
• E) iterative destruction

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Definitions:

Total Spending

The aggregate amount of money spent by consumers, businesses, and the government in an economy over a specific period.

Inelastic

Characterizes a condition where a change in price leads to a relatively small change in the quantity demanded or supplied.

Price Elasticity of Demand

The responsiveness of the quantity demanded of a good to a change in its price, with all other factors being held constant.

Elastic

Describes a situation where the demand for a product significantly changes in response to changes in its price.