What is perfectly elastic demand and perfectly inelasticity of demand?

Solutions

Expert Solution

Answer :-

Price elasticity of demand is the responsiveness of the quantity demanded of a commodity to changes in its price; defined as the percentage change in quantity demanded divided by the percentage change in price.

Price and quantity demanded are inversely related.

Ep= % change in quantity demanded/ % change in price

perfectly elastic demand :

when a 1% change in the price would result in an infinite change in quantity demanded.

A demand that has the characteristic that even the slightest increase in price will lead to zero quantity demanded.

The price elasticity of demand equals infinity

Perfectly inelastic demand:

When a 1% change in the price would result in no change in the quantity demanded.

A demand that exhibits zero responsiveness to price changes. No matter what the price is, the quantity demanded remains the same.

The price elasticity of demand for a good has a value of zero

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

What is perfectly elastic demand and perfectly inelasticity of demand?

The demand curve of a monopolist is A. Perfectly elastic B. Very elastic but not perfectly...

The demand curve of a monopolist is A. Perfectly elastic B. Very elastic but not perfectly elastic C. Perfectly inelastic D. Very inelastic but not perfectly inelastic

• Is demand for illegal drugs elastic, inelastic, highly elastic, highly inelastic,perfectly elastic, or perfectly inelastic?...

• Is demand for illegal drugs elastic, inelastic, highly elastic, highly inelastic,perfectly elastic, or perfectly inelastic? • What would the shape of that demand curve be (flatter or steeper)? • Prior to completing the Written assignment, you probably have ideas about how we can reduce illegal drug usage. Should we work more on reducing supply or reducing demand? • Why do you think that strategy (supply-side or demand-side) is best?

For each of the following, identify where demand is elastic, inelastic, perfectly elastic, perfectly inelastic, or unit elastic:

For each of the following, identify where demand is elastic, inelastic, perfectly elastic, perfectly inelastic, or unit elastic: (a) Price rises by 10 percent, and the quantity demanded falls by 2 percent (b) Price falls by 5 percent, and the quantity demanded rises by 4 percent. (c) Price falls by 6 percent, and the quantity demanded does not change. (d) Price rises by 2 percent and the quantity demanded falls by 1 percent.

iv) In your opinion, to what extent the perfectly elastic demand differs from perfectly inelastic demand....

iv) In your opinion, to what extent the perfectly elastic demand differs from perfectly inelastic demand. Support your answer with suitable graph.

What does it mean to have perfectly elastic demand? What does it mean to have perfectly...

What does it mean to have perfectly elastic demand? What does it mean to have perfectly inelastic demand? Graph each What factors effect the magnitude of the price elasticity of demand? What is meant by a proprietorship? What are its advantages and disadvantages? What is meant by a corporation? What are its advantages and disadvantages? What is meant by a partnership? What is its advantages and disadvantages?

Consider a market with a perfectly elastic demand curve at p∗= 1,763 and a perfectly inelastic...

Consider a market with a perfectly elastic demand curve at p∗= 1,763 and a perfectly inelastic supply curve at q∗= 452. What is the Consumer Surplus? What is the Producer Surplus?

The demand and the supply for a good are each neither perfectly elastic nor perfectly inelastic....

The demand and the supply for a good are each neither perfectly elastic nor perfectly inelastic. Imposing an excise tax on the good is: a, paid by only seller b, paid by only buyer c, paid by best buyer and seller d, paid by neither buyer or seller. Which of the following statements about a competitive market is INCORRECT? a, a price floor is aimed at helping consumer b, price ceiling increase quantity demand c, Consumer surplus increase when price...

A perfectly competitive firm is said to face a perfectly elastic demand curve a.) Explain why...

A perfectly competitive firm is said to face a perfectly elastic demand curve a.) Explain why the price elasticity is so high under perfect competition: b.)What is the consequences of a perfectly elastic demand curve on the marginal revenue received by the individual perfect competitor? c.)ased on your answers to b, state the profit optimizing rule (optimal Q) to as it applies to perfect competitors ONLY:

A perfectly competative firm is said to face a perfectly elastic demand curve. a. Explain why...

A perfectly competative firm is said to face a perfectly elastic demand curve. a. Explain why the price elasticity is so high under perfect competition b.What is the consequence of a perfectly elastic demand curve on the marginal revenue recieved by the individual perfect competitor? c.Based on your answers to b, state the profit optimizing rule (optimal Q) to as it applies to perfect competitor ONLY:

Subjects