Consider a Demand Curve That Has a Constant Elasticity Value

question 174

Multiple Choice

Consider a demand curve that has a constant elasticity value of 0.What happens to quantity demanded and total revenue when price increases?

• A)The quantity demanded and total revenue remain the same.
• B)The quantity demanded does not change but total revenue increases.
• C)The quantity demanded and total revenue fall to zero.
• D)The quantity demanded does not change but total revenue decreases.

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Definitions:

Booming Economy

An economic state characterized by significant growth, increased employment, and rising consumer confidence and spending.

Recessionary Economy

An economy experiencing a significant decline in activity across the economy, lasting longer than a few months, typically visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.

Stock

A form of investment that indicates one has a stake in a company and entails a portion of the company's assets and profits.

Expected Rate of Return

The profit or loss that an investor anticipates on an investment, expressed as a percentage of the investment’s cost.