If an Increase in Income Results in a Rightward Parallel

question 42

Multiple Choice

If an increase in income results in a rightward parallel shift of the demand curve,then at any given price,the price elasticity of demand will have

• A) increased in absolute terms.
• B) decreased in absolute terms.
• C) remained unchanged.
• D) increased, decreased or stayed the same. It cannot be determined.

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Definitions:

Par Value

An arbitrary value that is placed on each share of stock. Par value represents legal capital and not market value.

Paid-in Capital

Funds raised by a company through the issuance of shares, representing the capital contributed by shareholders.

Dividends in Arrears

Dividends in arrears are dividends that a corporation has not yet paid out to its shareholders for preferred stock, accumulative from prior periods.

Repurchase

The act of buying back previously sold stock or bonds from the market or shareholders by the issuing company, often to reduce the amount of outstanding shares and increase the value of remaining shares.