The Elasticity of Demand Is Used to

question 36

Multiple Choice

The elasticity of demand is used to

• A) determine if consumers will or will not buy a product.
• B) measure how responsive consumers are to a change in price.
• C) determine in what direction the demand curve shifts if income changes.
• D) find the market equilibrium.
• E) determine if a change in price results in a shortage or a surplus.

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Definitions:

Interest Rate

The proportion of a loan or savings amount that is charged or paid as interest to the borrower or saver.

Compounded Monthly

The monthly exercise of determining interest by applying it to the initial principal amount as well as to the interest that has been accumulated over preceding periods.

Accrued Interest

Interest that has been incurred but not yet paid.

Initial Loan

The original amount of money borrowed or the starting balance of a loan before any payments or interest are applied.