Assume the Demand for a Product Is Perfectly Inelastic

question 56

Multiple Choice

Assume the demand for a product is perfectly inelastic.If government establishes a price floor that is $2 above the equilibrium price,the resulting:

• A)shortage will be greater the more elastic the supply
• B)shortage will be greater the less elastic the supply
• C)surplus will be greater the more elastic the supply
• D)surplus will be greater the less elastic the supply
• E)the shortage will be the same regardless of the elasticity of the supply curve

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Definitions:

Collective Behaviours

Behaviours that occur when people come together to achieve a meaningful short-term goal.

Short-term Goal

An objective or aim that is intended to be achieved in a brief period, typically less than a year.

Meaningful

Having significant, purposeful, or important quality or implication.

Cyclical Theory

Cyclical theory is the idea that certain phenomena or events recur in cycles, often used in the context of economic, social, or historical patterns.