If You Spend a Large Portion of Your Income on a Good

question 236

Multiple Choice

If you spend a large portion of your income on a good,

• A) supply of that good would be price elastic.
• B) demand for that good is more elastic than if you spent a smaller portion of your income on the good.
• C) supply of that good is price inelastic.
• D) demand for that good is less elastic than if you spent a smaller portion of your income on the good.
• E) the good must be able to be produced at a constant (or gently rising) opportunity cost.

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Definitions:

Operating Cash Flow

Represents the amount of cash generated by a company's normal business operations.

Fixed Asset Additions

Expenditures involving the acquisition or improvement of long-term assets that increase the company’s operational capacity or extend the asset's useful life.

Accounts Receivable

Amounts owed by customers to a company for goods or services provided on credit.

Income Statement

An account that tracks a business's financial transactions, including income and expenditures over a designated timeframe, leading to a final profit or loss.