Which of the Following Is a Reason Why the Demand

question 61

Multiple Choice

Which of the following is a reason why the demand curve for an item would be more elastic?

• A) The item is a necessity.
• B) People's incomes are very high relative to the cost of the item.
• C) The item has many very good substitutes.
• D) The cost of the item forms a very small part of consumers' budgets.

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Definitions:

Unpaid Dividends

Dividends declared by a company's board of directors that have not yet been paid out to shareholders.

Dividend Yield

An indicator demonstrating the yearly dividends paid by a company compared to its stock price.

Constant Growth Stock

A stock assumed to pay dividends that grow at a constant rate indefinitely, making it possible to use dividend discount models for valuation.

Warrants

Financial derivatives that give the right, but not the obligation, to buy or sell a security at a specific price before a certain date.