When a Demand Curve Is Price Inelastic

question 58

Multiple Choice

When a demand curve is price inelastic

• A) a reduction in price increases the amount spent on the good.
• B) the quantity demanded will increase even if price remains constant.
• C) a 1 percent increase in price will result in a less than 1 percent decrease in the quantity demanded.
• D) the change in quantity will always be greater than the change in price.
• E) demand must be falling.

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Differentiate between dependent and independent variables in experimental design.

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Definitions:

Competitive Market

A market structure characterized by many buyers and sellers, where no single entity has the power to influence market prices.

Profit

Profit is the financial benefit realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes involved in maintaining the activity.

Short-Run Equilibrium

A situation in a market where demand equals supply, resulting in a stable price level, but which may not reflect long-term market dynamics.

Competitive Price-Taker

A rephrased scenario where businesses in competitive markets accept the prevailing market price as given because they have no power to influence it.