Draw the demand curve for a good whose price elasticity of demand is equal to infinity. Be sure to label both axes.
What will be an ideal response?
The demand curve in the graph is a horizontal line, indicating that the quantity of the good is infinitely responsive to any change in price.
You might also like to view...
Refer to A Negative Externality Problem. Suppose there are no transactions costs. Also suppose the externality is internalized when the damaged parties offer producers a bribe of $10 per unit to reduce their production. Coasian analysis indicates that social gain in this situation will equal
Demand for a good is given by Q = 100 - P. The private marginal cost of production is MCP = 10 + Q. There is a $10 per unit negative production externality in this situation. a. $0 b. $800 c. $1,600 d. $3,200
If the price were $25, this firm would _______ in the short run and _______ in the long run.
A. shut down; stay in business
B. shut down; go out of business
C. operate; stay in business
D. operate; go out of business