When Demand Is Perfectly Inelastic,the Demand Curve Will Be

question 270

Multiple Choice

When demand is perfectly inelastic,the demand curve will be

• A)negatively sloped, because buyers decrease their purchases when the price rises.
• B)vertical, because buyers purchase the same amount as before whenever the price rises or falls.
• C)positively sloped, because buyers respond by increasing the market quantity demanded of the good when price rises.
• D)positively sloped, because buyers respond by increasing their total expenditure on the good when price rises.

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Definitions:

Fixed Manufacturing Expenses

Costs that do not vary with the level of production, such as rent, salaries, and equipment depreciation.

Selling and Administrative Expenses

Expenses related to the sale of products or services and the general administration of a business, excluding production costs.

Fixed Manufacturing Overhead

The portion of manufacturing overhead costs that remain constant regardless of the level of production, such as depreciation on factory equipment or salaries of factory supervisors.

Unit Product Cost

represents the total cost to produce one unit of product, including direct materials, direct labor, and overhead.