Which of the Following Is a Possible Reason for the Price

question 25

Multiple Choice

Which of the following is a possible reason for the price elasticity of demand for cigarettes being large for young smokers?

• A)They have large discretionary incomes.
• B)The price of cigarettes has increased recently.
• C)They are no longer permitted to smoke in public.
• D)Cigarette advertising on television has been banned.
• E)The proportion of income a young smoker spends on cigarettes is usually quite large.

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Definitions:

Annual Interest Expense

The total amount of interest a company expects to pay on its debts over a year.

$100,000 Bond

A debt instrument issued by a corporation or government entity, with a principal amount of $100,000, to raise funds from investors.

Premium

An amount paid in addition to a standard price or rate, or the amount above par value for a security.

Bond Interest Expense

The cost incurred by an issuer of bonds for the interest payments made to bondholders over a period.