If the Demand Curve for a Good Always Has Unitary

question 67

Multiple Choice

If the demand curve for a good always has unitary price elasticity,what does this imply about consumer behavior?

• A) Consumers do not react to a price change.
• B) Consumers will spend a constant total amount on the good.
• C) Consumers are irrational.
• D) Consumers do not obey the Law of Demand.

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Definitions:

Diminishing Returns

A principle indicating that as more of a variable input is added to a fixed input, the added output from each additional unit of input will eventually decrease.

Resource Labor

The work force considered as an economic resource, emphasizing the skills and abilities workers bring to the economy.

Marginal Output

The additional quantity of output that is produced by using one more unit of a particular input, holding all other inputs constant.

Fixed Resources

Assets and resources owned by a business or economy that cannot be easily changed in the short term, such as buildings and land.