If the Quantity Demanded Is Infinitely Responsive to Any Change

question 58

Multiple Choice

If the quantity demanded is infinitely responsive to any change in price, the demand curve is

• A) upward sloping.
• B) downward sloping.
• C) horizontal.
• D) vertical.

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Definitions:

Coase Theorem

A principle that asserts that if property rights are well-defined and transaction costs are negligible, parties will negotiate to correct externalities and allocate resources efficiently.

Private Market

A private market is a part of the financial market in which investments are negotiated directly between parties, without public market listing.

Externalities

Unintended outcomes from business transactions impacting external groups, not included in the product or service pricing.

Coase Theorem

A principle that asserts that when trade in an externality is possible and there are no transaction costs, bargaining will lead to an efficient outcome regardless of the initial allocation of property.