If the Absolute Value of the Price Elasticity of Demand

question 258

Multiple Choice

If the absolute value of the price elasticity of demand for a product is greater than 1, then

• A) quantity demanded is not very sensitive to price changes.
• B) demand is elastic.
• C) demand is unit-elastic.
• D) demand is inelastic.

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Definitions:

Net Investment

The total spending on new capital assets minus the depreciation on existing assets, indicating the growth in a company’s or economy's capital stock.

Depreciation

The method by which a company allocates an asset's cost over its useful life, reflecting the consumption of the asset's economic benefits.

Disposable Income

The reserve of funds households possess for spending and saving after income tax payments.

Savings

The portion of disposable income not spent on consumption of goods and services, set aside for future use.