Infinite as demand can go on increasing even when the price is constant

Explanation:

A horizontal demand curve is a straight line parallel to the x-axis. It means that no matter what the price is, the quantity demanded remains the same. In other words, the elasticity of demand is infinite. Let's understand this concept in detail.

Demand Curve:
A demand curve represents the relationship between the price of a product and the quantity demanded by consumers. It slopes downwards from left to right, indicating that as the price decreases, the quantity demanded increases, and vice versa.

Elasticity of Demand:
Elasticity of demand measures the responsiveness of quantity demanded to a change in price. It is calculated as the percentage change in quantity demanded divided by the percentage change in price.

Horizontal Demand Curve:
A horizontal demand curve is a unique case where the quantity demanded remains constant regardless of the change in price. This means that the percentage change in quantity demanded is infinite for any change in price. As a result, the elasticity of demand is also infinite.

Implications of Infinite Elasticity:
1. Perfectly Elastic Demand: A horizontal demand curve represents perfectly elastic demand because consumers are extremely responsive to price changes. Even a slight increase in price leads to a complete loss of demand.
2. Substitutability: When demand is perfectly elastic, consumers have a wide range of substitutes available. They can easily switch to alternative products if the price of a particular product changes.
3. Competitive Market: Infinite elasticity of demand suggests a highly competitive market where firms have no control over prices. In such a market, firms must accept the prevailing market price if they want to sell their products.
4. Price-Takers: Firms operating in a perfectly elastic demand market are price-takers. They must adjust their production and pricing decisions according to the market conditions without having the power to influence prices.

In conclusion, a horizontal demand curve implies that the elasticity of demand is infinite. This means that consumers are extremely responsive to price changes, and firms operating in such a market are price-takers.