We Should Never Assume That an Inelastic Demand Curve Is

question 260

Multiple Choice

We should never assume that an inelastic demand curve is a perfectly inelastic demand curve because

• A) there has never been evidence of a perfectly inelastic demand curve.
• B) an inelastic demand curve may be perfectly inelastic at some times but not others.
• C) perfectly inelastic demand curves are rare.
• D) an inelastic demand curve may be elastic at high prices.

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Definitions:

Resource Consumption

The amount of resources, such as materials, energy, or time, used in the production of goods or services.

Activity Rates

The charges or costs applied to specific activities or cost drivers in activity-based costing.

Activity-Based Costing

A costing method that assigns overhead and indirect costs to specific products or projects based on their activity levels.

Overhead Cost

Expenses that are not directly attributed to creating a product or service but are necessary for running the business, such as rent, utilities, and office supplies.