If the Demand Curve for a Good Always Has Unitary

question 67

Multiple Choice

If the demand curve for a good always has unitary price elasticity,what does this imply about consumer behavior?

• A) Consumers do not react to a price change.
• B) Consumers will spend a constant total amount on the good.
• C) Consumers are irrational.
• D) Consumers do not obey the Law of Demand.

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Definitions:

Cash Flow Streams

Multiple flows of cash, either inflowing or outflowing from different sources or activities, over a period.

Firm Value

The monetary value assigned to a business entity, influenced by its operational performance, future earnings, and market conditions; essentially a measure of its worth in the marketplace.

Pre-Tax Salvage Value

The estimated resale value of an asset before taxes are considered, at the end of its useful life.

Straight-Line Depreciation

A method of allocating the cost of a tangible asset over its useful life in equal annual amounts, reflecting a constant rate of expense over time.