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:

Operating Activity

Activities that relate directly to the operations of the company, including production, sales, and other core business functions.

Investing Activity

Financial operations related to acquiring or disposing of non-current assets, crucial for budgeting and strategic planning of an organization's capital.

Financing Activity

Transactions related to raising capital and repaying investors, including issuing stock, paying dividends, and borrowing funds.

Net Income

A company's overall earnings following the deduction of all costs and taxes from its gross income.