The figure given below shows the demand curves for five products: A, B, C, D, and E.Figure 6.1

-A 0.5% increase in the price of a particular product causes the quantity demanded of the product to drop to zero. This means that the price elasticity of demand for the product is:
A)perfectly elastic.
B)unit-elastic.
C)perfectly inelastic.
D)moderately elastic.
E)moderately inelastic.

Question

The figure given below shows the demand curves for five products: A, B, C, D, and E.Figure 6.1
 
-A 0.5% increase in the price of a particular product causes the quantity demanded of the product to drop to zero. This means that the price elasticity of demand for the product is:
A)​perfectly elastic. 
B)​unit-elastic. 
C)​perfectly inelastic. 
D)​moderately elastic. 
E)​moderately inelastic.

Quizplus · Accepted Answer

Perfectly elastic demand means that a tiny increase in price leads to a complete drop to zero in the quantity demanded, which matches the scenario described.

The Figure Given Below Shows the Demand Curves for Five