When Demand Is Perfectly Elastic

question 78

Multiple Choice

When demand is perfectly elastic:

• A) the demand curve is perfectly vertical.
• B) the demand curve is perfectly horizontal.
• C) price elasticity is exactly −1.
• D) the response to a change in price is immediate.

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Definitions:

Variable Input

A production input whose quantity can be changed in the short term to adjust the level of output.

Marginal Product Curve

The marginal product curve depicts the change in output resulting from employing one more unit of a specific input, holding all other inputs constant, and typically features phases of increasing, constant, and diminishing marginal returns.

Fixed Input

A resource or input in the production process that remains unchanged regardless of the level of output or production.

Capital

Resources, such as funds or other assets, that are available for use in the production of goods or services and investment.