When demand is perfectly elastic:
a. the demand curve is vertical.
b. the demand curve is horizontal.
c. consumers do not respond to price changes.
d. suppliers do not respond to price changes.
Ans: b. the demand curve is horizontal.
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As contrasted to the Keynesian view, mainstream economists believe that ________ than Keynesian economists believe
A) the real GDP growth rate is larger B) any crowding out effect is smaller C) the effects from fiscal stimulus are weaker D) potential GDP is less important E) the multiplier effect is larger
Suppose a share of stock is expected to pay an annual dividend of $12 forever. At a discount rate of 9.4 percent, the share's market price should be
A) $12.77. B) $13.13. C) $112.80. D) $127.66.
When the aggregate demand curve shifts to the right, intersecting the aggregate supply curve on its upward-sloping or vertical segment,
a. demand-pull inflation occurs b. cost-push inflation occurs c. stagflation occurs d. deflation occurs e. the shift forces the price level to fall
At which interest rate is the present value of $145.80 two years from today equal to $125 today?
a. 2 percent b. 4 percent c. 6 percent d. 8 percent