The Demand for Cheerios Cereal Is More Price-Elastic Than the Demand

question 374

Multiple Choice

The demand for Cheerios cereal is more price-elastic than the demand for cereals as a whole. This is best explained by the fact that

• A)Cheerios are a luxury.
• B)Cereals are a necessity.
• C)there are more substitutes for Cheerios than for cereals as a whole.
• D)consumption of cereals as a whole is greater than consumption of Cheerios.

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Definitions:

Efficient Market

A financial market theory suggesting that asset prices fully reflect all available information, making it impossible to consistently achieve higher than average returns.

Insider Trading Laws

Regulations that prohibit the trading of a company's stocks or other securities by individuals with access to non-public, material information about the company.

Market Efficiency

The degree to which stock prices and other securities prices fully reflect all available information and are accurate reflections of the true value of investments.

Capital Markets

Markets that deal in the buying and selling of long-term debt or equity-backed securities to help in capital acquisition.