If Demand for a Good Is Perfectly Inelastic, Then

question 307

Multiple Choice

If demand for a good is perfectly inelastic, then

• A) a price increase would cause a fall in quantity demanded.
• B) a price increase would cause no change in quantity demanded.
• C) a price increase would cause an increase in quantity demanded.
• D) a price increase would cause a fall in total revenue.

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Definitions:

Production Function

An equation that describes the relationship between the quantities of productive factors used and the amount of product obtained.

Returns To Scale

Describes how the output of a production process changes as all inputs are scaled up or down by the same proportion.

Input

Resources used in the production process to generate output, including labor, capital, materials, and energy.

Production Function

The representation of the output that a firm can produce with varying combinations of inputs, emphasizing the efficiency and technology used.