A Perfectly Elastic Demand Curve Has a Price Elasticity of Demand

question 11

Multiple Choice

A perfectly elastic demand curve has a price elasticity of demand coefficient of:

• A) zero.
• B) 1.
• C) greater than 1, but less than infinity.
• D) less than 1, but greater than zero.
• E) infinity.

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Definitions:

Capital Budgeting Process

Involves the evaluation and selection of long-term investments that are in line with the firm's goal of shareholder wealth maximization.

Products

Goods or services that are created through a process and offered in the market to satisfy consumer needs or wants.

Services

Intangible products offered to consumers, involving human or mechanical efforts to fulfill needs or wants.

Payback Method

A capital budgeting technique that calculates the time required to recoup the cost of an investment, focusing on cash flows rather than profitability or cost of capital.