If a Firm Facing a Perfectly Elastic Demand Curve Raises

question 132

Multiple Choice

If a firm facing a perfectly elastic demand curve raises its price, then:​

• A)it will still sell exactly the same amount of output as it did at the lower price.
• B)it will lose some, but not all, of its sales.
• C)its sales will fall to zero.
• D)its sales will increase.
• E) it will lose its market share.

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Definitions:

Intercompany Sales

Transactions involving goods or services exchanged between subsidiaries within the same corporation, often used for internal accounting and tax purposes.

Unrealized Profits

Gains on investments or assets that have increased in value but have not yet been sold or cashed in.

Downstream Transactions

Transactions where a parent company sells to, buys from, or otherwise transacts with its subsidiary, affecting the financial statements of both entities.

Gross Profit Percentage

A financial metric that indicates the portion of revenue that exceeds the cost of goods sold, expressed as a percentage.