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 that is less than product price when it sells an extra
unit.
D. is selling a differentiated (heterogeneous) product.
Answer: B
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The Ricardian model can be simplified and made more explanatory by assuming that there is only one resource used in producing goods. What did Ricardo assume the resource was?
a. capital b. technology c. labor d. loanable funds
Assume initially this firm is at point A. The following would be a reason for a movement to point B. 
A. Wages go up and per unit capital costs go up. B. Both wages and per unit capital costs go down. C. Output decreases. D. Wages go down and per unit capital cost go up.