What does a perfectly elastic demand curve look like? A perfectly inelastic demand curve? Explain
What will be an ideal response?
A perfectly elastic demand curve is horizontal and a perfectly inelastic demand curve is vertical. If the demand curve is vertical, then quantity demanded does not change when price changes, or the elasticity equals 0. Quantity demanded is completely unresponsive to changes in price. If the demand curve is horizontal, a tiny increase in price causes quantity demanded to go to zero. As the percentage change in price approaches zero, elasticity of demand approaches infinity. Quantity demanded is extremely responsive to even very small changes in price.
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One of the costs associated with predictable inflation is:
A. tax distortions. B. budget charges. C. overheads. D. the re-distribution of purchasing power.
An increase in the demand for bubble gum might be caused by
A. the fact that blowing bubbles is now a popular activity. B. the fact that blowing bubbles is now an unpopular activity. C. a decrease in the number of people chewing gum. D. a decrease in income, assuming bubble gum is a normal good.
In feudalism, serfdom was maintained primarily through:
A. market forces. B. supply and demand. C. tradition. D. economic forces.
A relationship between two variables in which one variable increases at the same time as the other decreases is called
A. negative. B. nonlinear. C. constant. D. direct.