Under Which of the Following Conditions Is a Product Most

question 142

Multiple Choice

Under which of the following conditions is a product most likely to have an elastic demand?

• A) Consumers can easily find close substitutes for the product.
• B) The marginal cost of producing the product is equal to its marginal revenue.
• C) A large portion of a person's budget is spent on the product.
• D) The fixed costs associated with producing the product are higher than the variable costs associated with it.

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Definitions:

Price Ceiling

A government-imposed limit on how high a price can be charged for a product or service, aimed at preventing prices from reaching levels deemed too high for consumers.

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a given price level, at a specific time.

Black Market

An illegal market where goods or services are traded without compliance with legal requirements, often including the sale of illicit goods.

Illegal Trading

Unlawful transactions of goods or services that may involve insider trading, market manipulation, or trading of illegal items.