Use the Following Information to Answer the Next Two Questions

question 44

Multiple Choice

Use the following information to answer the next two questions:
Cigarettes - Price Elasticity of demand = -0.67
Alcohol - Price elasticity of demand=-1.00
Sodas - Price elasticity of demand=-1.28
-Out of the three products,which product has a unitary elastic demand curve?

• A)Cigarettes
• B)Alcohol
• C)Sodas
• D)None of the above

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Definitions:

Redemption

The process of paying off or buying back a security, such as a bond, at its face value or at a specified price before maturity.

Effective-Interest Amortization

A method of calculating the amortized cost of a bond or loan based on the periodic interest rate applied to the carrying amount, resulting in an equal interest expense over the period.

Bonds

Fixed-income investments representing loans to borrowers such as corporations or governments, paid back with interest over time.

Interest Accrual

The process of recognizing interest expense or interest income that has been earned but not yet paid or received.