The Most Important Determinant of the Price Elasticity of Demand

question 289

Multiple Choice

The most important determinant of the price elasticity of demand for a good is

• A)the definition of the market for a good.
• B)the availability of substitutes for the good.
• C)the share of the good in the consumer's budget.
• D)whether the good is a necessity or a luxury.

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Definitions:

Acid-Test Ratio

A financial indicator that evaluates the capability of a firm to settle its short-term obligations using its most readily convertible assets, not including inventory.

Year-End Balance Sheet

A financial statement that displays a company's assets, liabilities, and stockholders' equity as of the last day of the financial year.

Data

Information that is collected, stored, analyzed, and interpreted to support decision-making processes.

Trend Percentages

Analysis method used in financial and operational analysis to observe the direction and pace of changes in related data points over time.