The Price Elasticity of Demand for a Good Produced by a Monopolist

question 335

Multiple Choice

The price elasticity of demand for a good produced by a monopolist

• A) equals zero as long as the good has no close substitutes.
• B) is always inelastic since the demand curve slopes down.
• C) does not equal zero because there will always be some substitutes, however imperfect they may be.
• D) does not equal zero because every good has at least one good substitute for it.

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Definitions:

Present Value

The calculated present value of future monetary sums or cash flow series, with a defined rate of return.

Invest

The process of investing funds or assets in a project with the aim of earning extra income or gains.

Simple Interest

Interest calculated only on the principal amount, or initial investment, not on the accumulated interest of previous periods.

Compounded Annually

A method of calculating interest where the interest earned each year is added to the principal, so that the balance doesn't merely grow, it grows at an increasing rate.