A perfectly elastic demand curve
A)Is a horizontal line parallel to the x axis
B)Has an elasticity of demand between 0 and 1
C)Is the demand curve of a product that usually has no substitutes
D)None of the above

Question

​A perfectly elastic demand curve
A)​Is a horizontal line parallel to the x axis
B)Has an elasticity of demand between 0 and 1
C)Is the demand curve of a product that usually has no substitutes
D)​None of the above

Quizplus · Accepted Answer

A perfectly elastic demand curve is a horizontal line parallel to the x-axis, indicating that any increase in price would result in a complete drop in demand. This happens when there are perfect substitutes available for the product, allowing consumers to switch to another option if the price of the original product increases even slightly. With perfect substitutes available, consumers are extremely sensitive to changes in price, resulting in a demand curve that is perfectly elastic.

​A Perfectly Elastic Demand Curve

A Perfectly Elastic Demand Curve