Question

A perfectly elastic demand curve implies that the firm: A) must lower price to sell more output. B) can sell as much output as it chooses at the existing price. C) realizes an increase in total revenue which is less than product price when it sells an extra unit. D) is selling a differentiated (heterogeneous) product.

Answer 1

Answer:

A perfectly elastic demand curve means that the firm can sell as much output as it chooses at the current price.

Explanation:

The perfectly elastic demand implies that the demand curve is horizontal line parallel to the X axis. The price is fixed at a point and the firm can sell any amount of output at this point. The demand is infinite at the given price level. If the firm makes any changes in this price level, the demand will become zero.