A Perfectly Elastic Demand Function

question 205

Multiple Choice

A perfectly elastic demand function

• A) shows that a consumer is willing to pay any amount for the product.
• B) is characteristic of an individual firm operating in a perfectly competitive market.
• C) shows that the individual firm can increase sales by lowering the price of output.
• D) has a marginal revenue that is always decreasing.

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Definitions:

Marginal-cost-marginal-benefit Rule

A principle suggesting that optimal decision making involves continuing an activity until the additional benefits no longer exceed the additional costs.

Cost-benefit Analysis

A systematic approach to estimating the strengths and weaknesses of alternatives used to determine options that provide the best approach to achieve benefits while preserving savings.

Economic Project

A planned undertaking, typically with specific goals and financial frameworks, aimed at contributing to economic development or addressing economic issues.