Which Statement Is True About the Demand Curve in the Graph

question 82

Multiple Choice

Which statement is true about the demand curve in the graph?

• A)Demand is perfectly elastic.
• B)Demand is perfectly inelastic.
• C)Demand is more elastic at point Q than at point T.
• D)Demand is more elastic at point T than at point Q.

---

Definitions:

Cost of Equity

The return that investors require for their investment in shares, representing the compensation for taking on the risk of investing in equity.

M&M Proposition I

M&M Proposition I, under the Modigliani-Miller theorem, states that in an ideal market, the value of a firm is not affected by how it is financed, whether through debt or equity.

Homemade Leverage

A strategy whereby investors adjust the financial leverage of their investment by borrowing or lending money on their own, rather than relying on the leverage inherent in their investments.

Financial Leverage

The use of borrowed funds (debt) to amplify the potential return on investment.