The Smaller the Price Elasticity of Demand, the

question 293

Multiple Choice

The smaller the price elasticity of demand, the

• A) steeper the demand curve will be through a given point.
• B) flatter the demand curve will be through a given point.
• C) more strongly buyers respond to a change in price between any two prices P1 and P2.
• D) smaller the decrease in equilibrium price when the supply curve shifts rightward from S1 to S2.

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Definitions:

Present Value

The present value of a future amount of money or sequence of cash flows when discounted at a certain rate of return.

Annual Investment

The total sum of money invested in a particular option or portfolio in a year.

Present Values

The current value of a future amount of money or stream of cash flows given a specified rate of return.

Annuities

Financial products that provide a series of payments over time, often used for retirement savings or income generation.