- CFA Exams
- CFA Level I Exam
- Topic 2. Economics
- Learning Module 8. Topics in Demand and Supply Analysis
- Subject 2. Elasticities of Demand
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 ______.
B. perfectly elastic
C. perfectly inelastic
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 |