A Vertical Demand Curve Indicates That

question 147

Multiple Choice

A vertical demand curve indicates that:

• A) the quantity demanded will drop to zero if the price increases by any amount.
• B) the quantity demanded will remain unchanged no matter what happens to the price.
• C) the quantity demanded will rise if the price increases by any amount.
• D) the quantity demanded will only react to large changes in price.

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Definitions:

Natural Monopoly

A scenario in the marketplace where only one company can offer a product or service more affordably than any would-be rival, frequently because of the cost advantages associated with large-scale operations.

Marginal Cost

The change in total cost that arises when the quantity produced changes by one unit; essentially the cost of producing one more unit of a good.

Government Operation

Activities carried out by the government, including regulation, provision of public services, and maintenance of law and order.

Average Costs

The total costs divided by the total output produced, a measure of cost efficiency for production.