A Product Is Likely to Have a Price Elasticity of Demand

question 12

Multiple Choice

A product is likely to have a price elasticity of demand that exceeds 1 when

• A) its price falls.
• B) the percentage of income spent on it decreases.
• C) it is a necessity.
• D) it has close substitutes.

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Definitions:

Binding Requirement

A legal or formal obligation that parties must adhere to.

Undue Influence

The excessive pressure or influence exerted by one person over another to persuade or coerce them into making decisions that may not be in their best interest.

Contracting Parties

Entities entering into a contractual agreement, thereby accepting mutual obligations.

Criminal Prosecution

The process by which a person is charged, tried, and possibly convicted of committing a crime, undertaken by the state.