Use the Following Scenario to Answer the Following Questions: Dairy

question 11

Multiple Choice

Use the following scenario to answer the following questions: Dairy Wishes,a local ice cream store,finds that it sells out of ice cream sandwiches at the current price of $1.It raises the price to increase its revenues and finds that no one buys ice cream sandwiches anymore.
-The owners raised the price because they believed that the demand for ice cream sandwiches is

• A) inelastic.
• B) elastic.
• C) relatively price sensitive.
• D) perfectly elastic.
• E) unitary elastic.

---

Definitions:

Market Rate

The prevailing interest rate available in the marketplace for securities or loans.

Long-term Bonds

Bonds issued with a maturity date typically more than ten years in the future, representing a long-term financial obligation.

Open Market

A marketplace that is accessible to all buyers and sellers where prices are determined by supply and demand.

Stated Rate

The nominal interest rate specified in the contractual terms of a financial instrument such as a bond.