Since a Competitive fiRm Faces a Perfectly Inelastic Demand Curve

question 73

Multiple Choice

Since a competitive firm faces a perfectly inelastic demand curve, _____.

• A) it earns supernormal economic profits
• B) it is a price setter
• C) it cannot control the market price
• D) it earns positive economic profit but zero economic profit

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Definitions:

Tax Cut

A reduction in the rate of taxes imposed by the government.

Government Contract

A legal agreement between a government entity and a private company for goods or services, often involving specific regulatory requirements.

Company Fraud

Illegal activities conducted by a company or its representatives, intended to deceive investors, authorities, or the public for financial gain.

CAPM

The Capital Asset Pricing Model, a theoretical framework used to determine the expected return on an investment based on its risk in comparison to the market.