A consumer is willing and able to buy 100 units of a good at $100, but the consumer's quantity demanded falls to zero if the price rises even a fraction of a cent. The consumer's demand curve is
A) horizontal and is perfectly inelastic.
B) horizontal and is perfectly elastic.
C) vertical and is perfectly elastic.
D) downward sloping from higher prices down to $10 and then horizontal.

Question

Quizplus · Accepted Answer

A horizontal demand curve is perfectly elastic, meaning that the consumer is so sensitive to changes in price that even the slightest increase will cause them to stop buying the good completely. The fact that the quantity demanded falls to zero with even a small increase in price shows that this is the case for this consumer, making their demand curve perfectly elastic.

A Consumer Is Willing and Able to Buy 100 Units