-Consider the Straight- Line Demand Curve Illustrated in the Figure

question 76

Multiple Choice

-Consider the straight- line demand curve illustrated in the figure above. At a price of $6, demand

• A) is elastic.
• B) is inelastic.
• C) is unit elastic.
• D) More information is needed to determine if the demand is elastic, unit elastic or inelastic.

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Definitions:

Profit-Maximizing Level

The optimal point at which the difference between total revenue and total cost is the greatest, indicating the highest possible profit for a firm.

Short Run

a period in economics during which at least one input is fixed and cannot be changed, limiting a firm's ability to adjust production.

Fixed Costs

Expenses that do not change in proportion to the activities of a business within a certain range of operation, such as rent, salaries, and insurance.

Monopolistically Competitive

A market structure where many firms sell products that are similar but slightly differentiated, allowing them some control over pricing.