Question

Find a purely elastic industry. State why this industry is purely elastic market. Give examples where it’s possible.

Answer 1

The purely elastic products are those when even a slight price change causes an infinite change in the quantity demanded. For example

-- Clothing industry: Consumers have to wear clothes, however there are wide choices of what kind of clothing they prefer and how much are willing to spend. Thus the quantity demanded will change much more rapid than the price

-- Housing industry: People could live in a apartment, condo, townhouse, or even with family or friends. Since there are numerous available options thus it’s easier for people to not pay more than they are willing to. Thus it is a purely elastic industry.

-- Agricultural Industry: When the farmer produces crop of the same grade and variety, there is no reason for a commercial buyer to differentiate among them then they will not purchase from farmer who sets a price higher compared to others.