CFA Practice Question

There are 539 practice questions for this study session.

CFA Practice Question

If consumers won't pay more than 59 cents for a pack of gum and at 59 cents they will buy an almost infinite amount, price elasticity of demand at 59 cents is ______.

A. inelastic
B. perfectly elastic
C. perfectly inelastic
Correct Answer: B

The response to an increase in price above 59 cents is enormous, thus demand is perfectly elastic.

User Contributed Comments 3

User Comment
studyprep nobody would like to pay 100.01 (currency unit) to buy the 100.00 (same currency unit). Yet every body would love to pay 99.99 (same currency unit) to buy 100.00 (same currency unit). Just 0.01 up and demand is zero. (or, vice versa, just o.01 below demand is infinite).
xenamy Studyprep... such a good explanation!
Myrtus That is a piece of very elastic gum
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