If Demand Is Perfectly Inelastic, Then

question 37

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 statements is correct.

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Definitions:

Leases

Legal agreements that allow for the use of property or equipment for a specified time in exchange for payment.

Marginal Cost Functions

Mathematical representations or equations that show the cost required to produce one additional unit of output at each level of production.

Profit Maximizing

A strategy or approach used by businesses to increase their profits to the highest possible level by adjusting their production and pricing.

Input Prices

The costs associated with purchasing the raw materials, labor, and other inputs required for the production of goods or services.