A demand curve that is horizontal and in which a zero quantity will be sold at any price above a given price p while, at price p, any quantity can be sold is called a(n)
A) unitary elastic demand curve
B) perfectly elastic demand curve
C) perfectly inelastic demand curve

Question

Quizplus · Accepted Answer

A perfectly elastic demand curve represents a situation in which a small change in price results in an infinite change in quantity demanded. In other words, consumers are extremely responsive to any change in price and will not buy any quantity of the good if the price is even slightly too high. This results in a horizontal demand curve, as any increase in price above a certain level will result in zero quantity sold. At the specific price p, however, any quantity can be sold.

A Demand Curve That Is Horizontal and in Which a Zero