Other Things Being Equal, the Price Elasticity of Demand for a Product

question 294

Essay

Other things being equal, the price elasticity of demand for a product will be lower:
A.if there are many substitutes available.
B.if it is a large part of the consumer's budget.
C.in the long run as compared to the short run.
D.if there are few or no substitutes available.

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Definitions:

Systematic Risk

The risk inherent to the entire market or market segment, also known as non-diversifiable risk, affecting all investments to some degree.

Beta Coefficient

A parameter for assessing the fickleness, or inherent market risk, of a security or a composite of investments compared to the overall market.

Risk-free Asset

An investment that is expected to return its original investment without any loss and with a certain rate of return. Typically, government bonds are considered close to risk-free.