Given the Proportion of a Consumer's Income Spent on Various

question 5

Multiple Choice

Given the proportion of a consumer's income spent on various goods,the demand for _____ is likely to be the most price inelastic.

• A)furniture
• B)automobiles
• C)hotel rooms
• D)airline travel
• E)candy bars

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Definitions:

Stock Of Capital Goods

The total quantity of physical assets such as machinery, buildings, and equipment that are used to produce goods and services.

Gross Investment

The total amount spent on purchases of new capital assets plus replacement of depreciated assets.

Depreciation

The gradual decrease in the economic value of the capital stock of a firm, nation, or other entity, either through physical wear and tear or through obsolescence.

Capacity Utilization Rate

A measure of how well an entity is using its potential output capacity, often expressed as a percentage.