If the Demand Curve for a Life-Saving Medicine Is Perfectly

question 36

Multiple Choice

If the demand curve for a life-saving medicine is perfectly inelastic, then a reduction in supply will cause the equilibrium price to:

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

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Definitions:

Asset Management

The systematic process of developing, operating, maintaining, and selling assets in a cost-effective manner to maximize their value and investment return.

Profitability

A measure of the efficiency and effectiveness of a company in generating profit from its operations over a specific period.

Debt

An amount of money borrowed by one party from another, requiring repayment often with interest.

Liquidity

The ease with which an asset can be converted into cash without affecting its market price.