Which of the Following Statements About the Price Elasticity of Demand

question 207

Multiple Choice

Which of the following statements about the price elasticity of demand is correct?

• A)The elasticity of demand for a good in general is equal to the elasticity of demand for a specific brand of the good.
• B)The absolute value of the elasticity of demand ranges from zero to one.
• C)Demand is more elastic in the long run than it is in the short run.
• D)Demand is more elastic the smaller the percentage of the consumer's budget the item takes up.

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Definitions:

Floating-rate Debt

A type of debt instrument whose interest payment varies with market interest rates.

Market Interest Rate

The prevailing rate of interest determined by supply and demand in the money market that borrowers must pay to obtain funds.

Floating-rate Debt

A type of debt instrument with a variable interest rate, allowing the payments to fluctuate along with market interest rates.

Market Rates

Interest rates prevailing in the money market for short-term funds or the overall financial market's current interest rates.