If a Firm Sells a Product That Has a Perfectly

question 33

Multiple Choice

If a firm sells a product that has a perfectly inelastic demand curve, then if price doubles, it can be expected that

• A) total revenue will fall by one-half.
• B) total revenue will double.
• C) total revenue will remain unchanged.
• D) supply will decrease.

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Definitions:

Rights Offering

A method by which a company raises capital by offering existing shareholders the chance to buy additional shares at a discount.

Market Price

The current selling or buying price of a service or asset in the market.

New Equity Issue

The process through which a company raises capital by selling shares of stock to the public or private investors for the first time.

Shares Undervalued

A situation where stock shares are being sold for less than their intrinsic value, often due to market inefficiencies.