If the Supply Curve for Aspirin Is Perfectly Elastic, Then

question 22

Multiple Choice

If the supply curve for aspirin is perfectly elastic, then a reduction in demand will cause the equilibrium price to:

• A) stay the same and the equilibrium quantity to fall.
• B) fall and the equilibrium quantity to fall.
• C) rise and the equilibrium quantity to stay the same.
• D) rise and the equilibrium quantity to fall.

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Definitions:

Transfer Payments

Payments made by the government to individuals, without any expectation of a direct return or exchange of goods or services.

GDP

Gross Domestic Product; a measure of the economic performance of a country, representing the total value of all goods and services produced over a specific time period.

GDP

Gross Domestic Product, a measure of the total economic output of a country, representing the value of all goods and services produced over a specific time period.

Contribution

The act of providing something, such as effort, money, or resources, to a common pool or goal.