If the Demand Curve Is Perfectly Elastic, and If the Price

question 216

Multiple Choice

If the demand curve is perfectly elastic, and if the price of the good is increased by 10 percent by the seller, then revenue from the sale of the good would

• A)remain constant.
• B)fall to zero.
• C)increase by 10 percent.
• D)decrease by 10 percent.

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Definitions:

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance costs.

Variable Costs

Expenses that change in proportion to the volume of goods or services a company produces, such as materials and labor costs.

Primary Management Function

The core activities central to managing an organization, often categorized as planning, organizing, leading, and controlling.

Macro Uncertainty

Macro uncertainty refers to the unpredictable changes and instability in the macroeconomic environment that affect countries, markets, and global financial systems.