The Slope of a Demand Curve Is Not Used to Measure

question 206

Multiple Choice

The slope of a demand curve is not used to measure the price elasticity of demand because

• A)the slope of a linear demand curve is not constant.
• B)the slope of a line cannot have a negative value.
• C)the measurement of slope is sensitive to the units chosen for price and quantity.
• D)the slope of the demand curve does not tell us how much quantity changes as price changes.

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Definitions:

ROE

Return on Equity, a measure of the profitability of a business in relation to the equity, calculated as net income divided by shareholder's equity.

Plowback

The reinvestment of earnings by a company back into its business, often for expansion or development; also known as retained earnings.

PEG Ratio

A stock's price-to-earnings ratio divided by the growth rate of its earnings, used to determine the relative trade-off between the price of a stock, the earnings generated per share, and the company's expected growth.

ROE

Return on Equity, a measure of financial performance calculated by dividing net income by shareholder equity, indicating how effectively management is using a company’s assets to create profits.