If Demand Is Perfectly Inelastic,then

question 140

Multiple Choice

If demand is perfectly inelastic,then:

• A) the own price elasticity of demand is infinite in absolute value.
• B) a small increase in price will lead to a situation where none of the good is purchased.
• C) the demand curve is vertical.
• D) None of the preceding statements is correct.

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Definitions:

Price

The amount of money required to purchase a good or service, determined by various factors including supply and demand.

Perfectly Competitive Industry

A market structure where many firms sell identical products, entry and exit are unobstructed, and all buyers and sellers have perfect information.

Supply Curve

A graphical representation showing the relationship between the price of a good and the quantity of the good that producers are willing to supply.

Economic Profits

The difference between total revenue and total costs, including both explicit and implicit costs, representing the excess returns over the firm's opportunity costs.