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The horizontal demand curve parallel to x-axis implies that the elasticity of demand is
- a)Zero
- b)Infinite
- c)Equal to one
- d)Greater than zero but less than infinity
Correct answer is option 'B'. Can you explain this answer?
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The horizontal demand curve parallel to x-axis implies that the elasti...
Understanding Elasticity of Demand
Elasticity of demand measures how responsive the quantity demanded of a good is to a change in its price. A horizontal demand curve indicates a specific scenario in this context.
Characteristics of a Horizontal Demand Curve
- Perfectly Elastic Demand: A horizontal demand curve suggests that consumers are willing to buy any quantity of the good at a specific price, but none at any higher price. This is characteristic of perfectly elastic demand.
- Implication of Price Changes: If the price were to increase even slightly, the quantity demanded would drop to zero. Conversely, if the price decreases, consumers would purchase any amount available.
Elasticity Value
- Infinite Elasticity: The elasticity of demand for a horizontal curve is technically infinite. This means that even a minuscule increase in price leads to a complete drop in quantity demanded.
- Consumer Sensitivity: Consumers are extremely sensitive to price changes for goods represented by a horizontal demand curve. They will not tolerate price increases, which is why demand remains constant at that price level.
Conclusion
Given these characteristics, the correct answer to the question concerning the elasticity of demand for a horizontal demand curve is:
- Option B: Infinite.
This indicates that the demand is perfectly elastic, as consumers will only buy at a certain price and will not purchase at all above that price. Understanding this concept is crucial for analyzing market behaviors in economic theory.
Elasticity of demand measures how responsive the quantity demanded of a good is to a change in its price. A horizontal demand curve indicates a specific scenario in this context.
Characteristics of a Horizontal Demand Curve
- Perfectly Elastic Demand: A horizontal demand curve suggests that consumers are willing to buy any quantity of the good at a specific price, but none at any higher price. This is characteristic of perfectly elastic demand.
- Implication of Price Changes: If the price were to increase even slightly, the quantity demanded would drop to zero. Conversely, if the price decreases, consumers would purchase any amount available.
Elasticity Value
- Infinite Elasticity: The elasticity of demand for a horizontal curve is technically infinite. This means that even a minuscule increase in price leads to a complete drop in quantity demanded.
- Consumer Sensitivity: Consumers are extremely sensitive to price changes for goods represented by a horizontal demand curve. They will not tolerate price increases, which is why demand remains constant at that price level.
Conclusion
Given these characteristics, the correct answer to the question concerning the elasticity of demand for a horizontal demand curve is:
- Option B: Infinite.
This indicates that the demand is perfectly elastic, as consumers will only buy at a certain price and will not purchase at all above that price. Understanding this concept is crucial for analyzing market behaviors in economic theory.
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