If Demand Is Perfectly Elastic, the Absolute Value of the Price

question 36

Multiple Choice

If demand is perfectly elastic, the absolute value of the price elasticity coefficient is

• A)infinity.
• B)zero.
• C)one.
• D)equal to the absolute value of the slope of the demand curve.

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Definitions:

Beta

A measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. It is used in the capital asset pricing model.

Randomly Selected Stocks

Randomly selected stocks are shares chosen without a specific criterion or pattern, used often in experimental portfolios or studies to simulate or analyze market behavior.

Expected Inflation

The anticipated rate at which the general level of prices for goods and services will rise over a period.

Market Risk Premium

Market risk premium refers to the additional return expected by investors for holding a risky market portfolio instead of risk-free assets.