If a Firm Faces a Perfectly Elastic Demand for Its

question 43

Multiple Choice

If a firm faces a perfectly elastic demand for its product,then

• A)it is not a price taker.
• B)it will want to lower its price to increase sales.
• C)it will want to raise its price to increase total revenue.
• D)its marginal revenue curve is horizontal at the market price.
• E)it will always make zero economic profit.

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Definitions:

Government Regulations

Rules set by government bodies to control or guide specific activities within the economy or society.

Long-Run Economic

Refers to an extended period during which all factors of production and outputs can be adjusted.

Differentiated Product

A product that is distinguished from similar products in the market by unique characteristics, leading to customer perception that there is no perfect substitute.

Market Demand

The total quantity of a product or service that consumers in a market are willing and able to purchase at various prices over a specified period.