Because the Demand Curve Is Downward Sloping, the Elasticity of Demand

question 124

Multiple Choice

Because the demand curve is downward sloping, the elasticity of demand is

• A)positive.
• B)negative (however, the negative sign is assumed and therefore ignored).
• C)zero.
• D)decreases from positive to negative.

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Definitions:

Purely Competitive Market

An idealized market structure featuring a large number of small firms, a homogeneous product, and no barriers to entry or exit, ensuring competitive price levels.

Firms

Firms refer to business entities or organizations that produce goods or provide services with the aim of making a profit.

Industry

A sector of the economy that is made up of manufacturing, production, or provision of services within a specific domain of activity or expertise.

Marginal Revenue

The supplementary income received from the sale of an additional unit of a product or service.