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A perfectly elastic demand is one in which the: Multiple Choice demand curve is perfectly vertical....

A perfectly elastic demand is one in which the: Multiple Choice demand curve is perfectly vertical. response to a change in price is immediate. demand curve is perfectly horizontal. price elasticity is exactly -1.

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Answer #1

A PERFECTLY ELASTIC DEMAND IS ONE WHICH THE:-

ANS:- Demand curve is perfectly horizontal.

Explanation :-

  • Price elasticity of demand is calculated by dividing the percenatge change in Quantity demanded with percentage change in price.

  

  • The demand curve of perfectly elastic demand is horizontal to X-Axis.
  • This means that a slightest change in price will lead to major change in Quantity Demanded by the customer. A small increase in price will cause the demand to fall to zero.
  • Here demand is infinte . Elasticity is represented with Ed.

So, Ed = ∞

Graphical representation

  • P is the price.
  • Q, Q1,Q2 are the Quantity demanded at given price.
  • D is the Demand Curve. which is parallel to X-Axis.
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