Which Is Not Characteristic of a Product with Relatively Inelastic

question 136

Multiple Choice

Which is not characteristic of a product with relatively inelastic demand?

• A) The good is regarded by consumers as a necessity.
• B) There are a large number of good substitutes for the good.
• C) Buyers spend a small percentage of their total income on the product.
• D) Consumers have had only a short time period to adjust to changes in price.

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Definitions:

Time Value of Money

Calculations involving the present and future values of money under the action of compound interest. Also called discounted cash flow.

Capital Budgeting Techniques

Methods used by companies to evaluate the profitability and financial feasibility of investment projects.

Incremental Cash Flows

The additional cash flow a project generates over the basic operation cash flows, used to analyze the profitability of a potential investment.

Replacement Project

A replacement project involves investing in new assets to replace old, inefficient, or obsolete ones to maintain or improve operational efficiency.