The Demand for a Good Is More Price Elastic

question 229

Multiple Choice

The demand for a good is more price elastic

• A) if closer substitutes are available.
• B) if the good is a necessity rather than a luxury.
• C) if the share of the good in the average consumer's budget is smaller.
• D) in the short run than in the long run.

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Definitions:

Contract Rate

The interest rate specified in a financial contract, notably in loans or leases, that must be paid over the duration of the agreement.

Effective Interest Method

A way of amortizing the bond premium or discount over the life of the bond in a manner that reflects a constant rate of interest.

Bond Premium

The amount by which the market price of a bond exceeds its principal amount or face value, typically as a result of changes in interest rates.

Interest Expense

The expenses an entity faces for borrowing funds, encompassing payments for loans, bonds, or credit lines.