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If Demand Is Perfectly Inelastic, the Demand Curve Is Vertical

question 21

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If demand is perfectly inelastic, the demand curve is vertical, and the price elasticity of demand equals 0.


Definitions:

Average Variable Cost

The total variable costs of production divided by the quantity of output produced, representing the variable cost per unit of output.

Total Variable Cost

The total of all expenses that vary with the level of output or production, including costs for materials and labor.

Total Fixed Cost

The sum of all costs that remain constant regardless of the level of production or output.

Total Revenue

The overall amount of money generated by a firm from its sales activities before any expenses are subtracted.

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