The Price Elasticity of Demand Is

question 91

Multiple Choice

The price elasticity of demand is

• A) always positive, so there is no reason to consider the absolute value of the price elasticity of demand.
• B) always negative, but by convention, economists typically express the price elasticity of demand as an absolute value.
• C) always equal to -1, which by convention economists typically express as an absolute value, or 1.
• D) always equal to zero, so there is no reason to consider the absolute value of the price elasticity of demand.

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Definitions:

Hedge Exposure

A risk management strategy used to reduce or mitigate the risk of adverse price movements in an asset, typically through the use of derivative instruments.

Transaction Exposure

The risk that the value of a company's foreign currency-denominated transactions will be adversely affected by exchange rate fluctuations.

Spot Rate

The existing market cost at which a specific asset is available for purchase or sale for instant delivery.

Forward Rate

The exchange rate specified in a forward exchange contract.