A firm with a highly inelastic demand for coal will:
A) cut consumption more than a firm with a highly elastic demand when price goes up.
B) cut consumption less than a firm with a highly elastic demand when price goes up.
C) refuse to cut consumption for any reason.
D) stop using coal entirely if a tax is imposed.

Question

Quizplus · Accepted Answer

A firm with a highly inelastic demand for coal will cut consumption less than a firm with a highly elastic demand when the price goes up because inelastic demand indicates that quantity demanded is not very responsive to price changes.

A Firm with a Highly Inelastic Demand for Coal Will