If the Demand for a Good Is Perfectly Elastic, the Price

question 287

Multiple Choice

If the demand for a good is perfectly elastic, the price elasticity of demand is ________ and the demand curve is ________.

• A) infinite; vertical
• B) zero; vertical
• C) zero; horizontal
• D) infinite; horizontal

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Definitions:

Prepaid Expense

Expenses paid in advance for goods or services which will be received in the future.

Unearned Revenue

Money received by an entity for a service or product yet to be delivered or performed.

Accrued Expense

Expenses that have been incurred but not yet paid or recorded in the financial statements.

Accrued Revenue

Income that has been earned through sales or services but has not yet been received or recorded.