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Explain increase in demand when supply is perfectly inelastic and increase in supply when demand is perfectly elastic?
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Explain increase in demand when supply is perfectly inelastic and incr...
However, the curve can be explained using a little imagination. If supply is perfectly elastic, it means that any change in price will result in an infinite amount of change in quantity. Suppose that you baked delicious cookies and your costs, including inputs and time, were $3 per cookie. At $3, you would be willing to sell as many cookies as you could. You would not sell a single cookie if the price were any lower than $3, and if price were above $3, you would sell an infinite amount. In summary, your supply curve would be perfectly elastic at a price of $3, and any change in price would result in a change in quantity supplied to infinity or zero, depending on whether price increased or decreased, respectively.

Similarly, perfectly elastic demand is an extreme example. Perfect elastic demand means that quantity demanded will increase to infinity when the price decreases, and quantity demanded will decrease to zero when price increases. When consumers are extremely sensitive to changes in price, you can think about perfectly elastic demand as “all or nothing.” For example, if the price of cruises to the Caribbean decreased, everyone would buy tickets (i.e., quantity demanded would increase to infinity), and if the price of cruises to the Caribbean increased, not a single person would be on the boat (i.e., quantity demanded would decrease to zero).
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Explain increase in demand when supply is perfectly inelastic and increase in supply when demand is perfectly elastic?
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Explain increase in demand when supply is perfectly inelastic and increase in supply when demand is perfectly elastic? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Explain increase in demand when supply is perfectly inelastic and increase in supply when demand is perfectly elastic? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Explain increase in demand when supply is perfectly inelastic and increase in supply when demand is perfectly elastic?.
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