For any horizontal demand curve, the price elasticity of demand is:

A. infinite.
B. 1.
C. equal to the price of the good.
D. 0.


Answer: A

Economics

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Suppose firms in a perfectly competitive market are incurring an economic loss. Over time

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Consider a particular market-clearing price and quantity under a perfectly competitive equilibrium. As the demand curve at this point becomes more inelastic, the consumer surplus in the market tends to:

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Refer to the above figure. Which panel is consistent with the Fed buying bonds?

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