which of the following best describes elasticity of demand in a perfect competitive market? Firm elasticity Market elasticity a. zero infinite b. zero some finite number c. infinite zero d. infinite some finite number i will post the answer tomorrow. I will not have access to internate till then. have a good time folks.

I’d say a but im not sure at all

I’d say C.

I just had this flash card. I think it’s D. Infinite elasticity is a perfectly elastic market. Market demand is not perfect, greater than zero less than infinite. Based on my notes, zero is no where to be found. Or my flash cards suck.

C is ok, but I think D is better. The problem with C is that at some point when the price increase is relatively big, people give up.

I am for D

I’m thinking D too.

D

Market elasticity has to be generally finite in this case… I can see that if draw a standard demand and supply curve which cross each other somewhere. Since demand elasticity is finite, if we are not on x- or y- axis, we know half of the explanation (there is picture in the cfaI book)…

D

the D’s have won! as per explanation by amberpower above

Drop one in the bucket for the pregnant lady!

Good Amber, may your pregnancy be suitably finite, and your happiness infinite.

Amber, I wish you a pregnancy like an European option! And let it be in the money @ expiration!

I think I would rather an American option, coming early is fine by me! I have never received such, um, enlightened, well wishes. LOL

Elasticity is perfectly horizontal (e.g. infinite and therefore positive) in perfect competition. It is downward sloping for monopolies and monopolistic competition.

…may your naked call not expire worthless, and your price be equal to the strike price at expiration.