Economists Use the Term Demand to Refer To

question 2

Multiple Choice

Economists use the term demand to refer to:

• A)a particular price-quantity combination on a demand curve
• B)the total amount spent on a particular product over a given time period
• C)the amount of a product that consumers are willing to purchase at a certain price
• D)the relationship between the various possible prices of a product and the quantities that consumers are willing to purchase at each price
• E)the price charged to consumers to purchase a given quantity of a product

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Definitions:

Profitability Index

A calculation that measures the ratio between the present value of future cash flows to the initial investment, used to assess the profitability of an investment.

IRR

The discount rate at which the net present value of all the cash flows from a project or investment equals zero.

Mutually Exclusive Investment

This refers to a situation in corporate finance where choosing one investment option prevents the selection of another due to constraints such as capital or projects serving the same purpose.

Net Present Value Profiling

A process of determining the value of a series of cash flows by discounting them to the present value to evaluate the profitability of an investment.