When Demand Is Price Inelastic

question 84

Multiple Choice

When demand is price inelastic,

• A) price and total revenue move in the same direction.
• B) price and total revenue move in the opposite direction.
• C) total revenue increases whether price goes up or down.
• D) total revenue decreases whether price goes up or down.

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Definitions:

Security Market Line

Represents the relationship between the risk of an investment and its expected return, illustrating the risk-return trade-off in capital market theory.

Market Risk Premium

The extra return expected by investors from holding a risky market portfolio instead of risk-free assets.

Security Market Line

A graphical representation used in financial markets to illustrate the relationship between risk and return for individual securities.

Reward-To-Risk Ratio

A measure used in finance to compare the expected returns of an investment to the amount of risk undertaken to capture these returns.