Suppose the "Poor" and "Rich" Have Identical Demand Functions for Good

question 12

Multiple Choice

Suppose the "poor" and "rich" have identical demand functions for good X but only differ in income (I) .

At a given price of X,the price elasticity of their individual demand curves is such that

• A) the rich person's demand is more elastic than the poor person's.
• B) the poor person's demand is more elastic than the rich person's.
• C) the poor person's demand is as elastic as the rich person's.
• D) the rich person's demand is as elastic as the poor person's.

---

Definitions:

Net Income

Net income is the total profit of a company after subtracting all expenses, taxes, and costs from its total revenue.

Common Stock

A form of corporate equity ownership, a type of security that represents ownership in a corporation, with voting rights at shareholder meetings.

Cash Dividend

A payment made by a corporation to its shareholders, usually in the form of cash, as a portion of the company's profits.

Earnings Per Share

A financial ratio that calculates the portion of a company's profit allocated to each outstanding share of common stock, serving as an indicator of the company’s profitability.