When There Are Very Few Substitutes for a Good, the Demand

question 112

Multiple Choice

When there are very few substitutes for a good, the demand for the good will tend to be

• A) inelastic.
• B) elastic.
• C) unitary.
• D) perfectly elastic.

---

Definitions:

Present Value

The present value of a future amount of money or series of cash flows, considering a certain rate of return.

Annuity

A monetary product that ensures a regular payment schedule to its holder, frequently used to secure a livelihood for people in their post-working years.

Compounding

The process whereby interest is credited to an existing principal amount as well as to interest already paid, causing the investment to grow at an accelerating rate.

Time Value

A financial principle stating that an identical amount of money has more value if it's accessible now rather than later, thanks to its capability to earn more over time.