A Perfectly Elastic Demand Curve Implies That the Firm

question 144

Multiple Choice

A perfectly elastic demand curve implies that the firm

• A) must lower price to sell more output.
• B) can sell as much output as it chooses at the existing price.
• C) realizes an increase in total revenue that is less than product price when it sells an extra unit.
• D) is selling a differentiated (heterogeneous) product.

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Definitions:

Perfect Information

A scenario in economics where all parties have access to all relevant information about a transaction, market, or event before it occurs.

Strikes

Work stoppages initiated by employees as a form of protest against terms of employment or to demand better wages and conditions.

Secondary Boycott

A form of protest by workers refusing to deal with companies that do business with another company involved in a labor dispute.

Strike Replacements

Workers hired by an employer to perform the jobs of striking employees during a labor dispute.