What Is the Expected Payoff from an Investment That Is

question 14

Multiple Choice

What is the expected payoff from an investment that is equally likely to move from $100 to $180 or $100 to $70?

• A)40
• B)15
• C)-15
• D)25

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Definitions:

Very Inelastic

Describes a situation where the demand or supply for a product is barely affected by changes in the price.

Calculate Elasticity

entails determining the degree to which the quantity demanded or supplied of a good changes in response to a change in its price.

Unit Elastic

A situation in which the percentage change in quantity demanded or supplied is equal to the percentage change in price.

Total Revenue

The total earnings accrued from a company's principal operations through the transaction of goods or services.