Elastic Demand Exists When

question 217

Multiple Choice

Elastic demand exists when

• A) a small percentage decrease in price produces a smaller percentage increase in quantity demanded and total revenue falls.
• B) a small percentage decrease in price produces a larger percentage increase in quantity demanded and total revenue increases.
• C) an increase in price causes a larger increase in quantity demanded and total revenue falls to zero.
• D) the quantity demanded remains the same regardless of level of price and total revenue is unchanged.
• E) a small percentage decrease in price produces a smaller percentage decrease in quantity demanded and total revenue increases.

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Definitions:

Horizontal Demand Curve

Represents a situation in which the demand for a product is perfectly elastic, indicating that consumers are willing to purchase any quantity of the product at a specific price.

Differentiated Product

A product that is distinguished from similar products in the market by unique characteristics or features, often leading to brand loyalty.

Horizontal Demand Curve

Represents a situation in economics where the demand for a good is extremely sensitive to changes in price, indicative of perfect elasticity.

Oligopolist

A company operating within an oligopoly market structure, where a small number of firms have a large majority of market share and can influence prices and competition.