A Perfectly Elastic Demand Function

question 205

Multiple Choice

A perfectly elastic demand function

• A) shows that a consumer is willing to pay any amount for the product.
• B) is characteristic of an individual firm operating in a perfectly competitive market.
• C) shows that the individual firm can increase sales by lowering the price of output.
• D) has a marginal revenue that is always decreasing.

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Definitions:

Taxes

Compulsory financial charges or some other type of levy imposed upon a taxpayer by a governmental organization.

Working Capital

The balance sheet accounts associated with day-to-day operating activities. Gross working capital is generally defined as current assets and net working capital as current assets minus current liabilities.

Accounts Receivable

Money owed to a company by its customers for goods or services already delivered but not yet paid for.

Inventory

Represents the goods or materials a business holds for the purpose of resale or production.