The Perfectly Elastic Demand Curve Faced by a Competitive Firm

question 11

Multiple Choice

The perfectly elastic demand curve faced by a competitive firm means that

• A) the product's price will be unaffected by any realistic change in the firm's level of output.
• B) the firm could increase total revenue by increasing the price.
• C) it could actually sell an infinite amount of output at the going price.
• D) as the firm expands output its marginal revenue will fall.
• E) total revenue is constant regardless of quantity produced.

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Definitions:

Instinct

An innate, typically fixed pattern of behavior in animals in response to certain stimuli, arising from their genetic makeup.

Need

A requirement essential for the survival, well-being, or functioning of an organism or the execution of a process.

Incentive

A motivational factor or reward that encourages a person to perform a specific action or exhibit a desired behavior.

Body Mass Index

A measure of body fat based on height and weight that applies to adult men and women.