A Perfectly Elastic Demand

question 19

Multiple Choice

A perfectly elastic demand:

• A) means consumers are extremely sensitive to a change in price.
• B) means quantity demanded is unchanged if the price changes by any amount.
• C) is demonstrated by a vertical demand curve.
• D) has a price elasticity of 1.

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Definitions:

Promotional Activities

Efforts designed to inform, persuade, or remind potential buyers about a business's products or services, often to boost sales or brand awareness.

Free Ride

Benefit received without contributing to the cost of its production, often resulting in under-provision of goods or services if too many consumers opt to not pay.

Reap Benefits

To gain or receive advantageous outcomes or rewards from a particular action or investment.

Vertical Contracts

Agreements between companies at different levels of the supply chain, such as manufacturers and retailers, aimed at controlling prices or excluding competitors.