Perfectly Elastic Demand Occurs When

question 146

Multiple Choice

Perfectly elastic demand occurs when:

• A) consumers are extremely sensitive to a change in price.
• B) the quantity demanded is unchanged when price changes by any amount.
• C) consumers are slow to alter their demand when the price changes.
• D) only large changes in price affect the quantity demanded.

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Definitions:

Economic Theory

A concept or principles developed to explain how economies work and how economic agents interact.

Substitute Goods

Goods or services that act as substitutes for each other, meaning that if the price of one goes up, the demand for the other also rises.

Production Costs

The total expenses incurred in manufacturing a product or offering a service, including raw materials, labor, and overhead.

Consumer Income

The total amount of income a consumer or household earns from various sources, including employment, investments, and benefits, which impacts their spending and saving behaviors.