If the Demand for Good a Is More Elastic Than

question 135

Multiple Choice

If the demand for good A is more elastic than the demand for good B,a small decrease in supply in both markets will cause

• A)a much greater increase in price for good A than for good B
• B)a much greater increase in price for good B than for good A
• C)the price will increase by the same amount in both markets
• D)only the price of good B will increase
• E)only the price of good A will increase

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Definitions:

Retention Ratio

The proportion of net income that is retained in the company rather than distributed to shareholders as dividends, indicating how much money is reinvested in the business.

Market Price

The rate at which a service or asset can presently be acquired or disposed of in the market.

Book Value

The net value of a company's assets minus its liabilities, often used as an estimate of a company's value if it were to be liquidated.

Market Price

The ongoing trading price for assets or services available in a market setting.