which demand curve is perfectly elastic? course hero

When is a demand curve said to be elastic?

Feb 23, 2020 · A perfectly elastic demand is one in which: A. the demand curve is perfectly vertical. B. the demand curve is perfectly horizontal. C. measured elasticity is exactly 1.

Which of the following is an example of perfectly elastic demand?

Exam #1 – Sample C -- Dunbar, p. 12 B. normal; inelastic C. inferior; elastic D. inferior; inelastic 59. The cross-price elasticity of demand between pancakes and waffles is positive. This indicates A. that pancakes and waffles are substitutes. B. that an increase in the price of pancakes will shift the demand curve for waffles to the right. C. that an increase in the price of waffles will ...

How do you find the price elasticity of demand?

May 07, 2017 · Explanation: 20. The price elasticity of demand for tickets to local baseball games is estimated to be equal to 0.89. In order to boost ticket revenues, an economist would advise: A. increasing the price of game tickets because demand is inelastic. B. not changing the price of game tickets because demand is unit elastic.

What are the factors that affect elasticity of demand?

the short ‑ run elasticity of demand for oil is greater than the long ‑ run elasticity 7. A demand curve is described as perfectly elastic if a. the same quantity is purchased regardless of price b. the same price is charged regardless of quantity sold c. neither price nor quantity demanded ever change d. only price can change

Which demand curve is perfectly elastic?

horizontal straight linePerfectly elastic demand curve is horizontal straight line. This is because at the given price the quantity demanded is infinite, even if there is a slight change in the price the demand becomes infinity and hence the curve is flat.

Which demand curve is perfectly elastic quizlet?

when demand is perfectly elastic, the demand curve is a horizontal line. the total value of sales of a good or service. it is equal to the price multiplied by the quantity sold.

Where is perfectly elastic demand?

Definition: A perfectly elastic demand curve is represented by a straight horizontal line and shows that the market demand for a product is directly tied to the price. In fact, the demand is infinite at a specific price. Thus, a change in price would eliminate all demand for the product.

What is an example of perfectly elastic demand?

Examples include pizza, bread, books and pencils. Similarly, perfectly elastic demand is an extreme example. But luxury goods, goods that take a large share of individuals' income, and goods with many substitutes are likely to have highly elastic demand curves.

Which type of supply curve is perfectly inelastic?

vertical supply curveA vertical supply curve, as shown in Panel (a) of Figure 5.11 “Supply Curves and Their Price Elasticities”, is perfectly inelastic; its price elasticity of supply is zero.

When demand is perfectly elastic the demand curve is horizontal vertical?

A perfectly elastic demand curve is horizontal, as shown in Figure 2, below. While it's difficult to think of real world example of infinite elasticity, it will be important when we study perfectly competitive markets. It's a situation where consumers are extremely sensitive to changes in price.

What is elastic demand curve?

Elastic demand or supply curves indicate that the quantity demanded or supplied responds to price changes in a greater than proportional manner. An inelastic demand or supply curve is one where a given percentage change in price will cause a smaller percentage change in quantity demanded or supplied.

Why is the demand curve for a competitive firm perfectly elastic?

Under perfect competition, a demand curve of the firm is perfectly elastic because the firm can sell any amount of goods at the prevailing price. So even a small increase in price will lead to zero demand. This indicates that the firm has no control over price.Dec 11, 2018

How do you draw a perfectly elastic demand curve?

0:044:40Graphing Price Elasticity of Demand - YouTubeYouTubeStart of suggested clipEnd of suggested clipIn this video we'll take a look at the different graphs for the various elasticity's of the manMoreIn this video we'll take a look at the different graphs for the various elasticity's of the man starting with the perfectly elastic demand curve.

What is unitary elastic demand curve?

Unitary elastic demand is a type of demand which changes in the same proportion to its price. It means that the percentage change in demand is exactly equal to the percentage change in price. In the unitary demand, the product elasticity is negative as the product price decrease does not help to generate more revenue.

What is the shape of supply curve if a product is perfectly elastic to change in its price?

horizontalPES = ∞ (i.e., infinity): The supply curve is horizontal; there is extreme change in demand in response to very small change in prices. Supply is “perfectly elastic.”

What is perfect elastic demand?

Perfect elastic demand is when the demand for the product is entirely dependent on the price of the product. The elasticity of demand is when a change occurs in the price, there will be a change in the demand. Examples of elastic goods include gas and luxury cars. Factors that affect elasticity is substitutes, time and necessity.

What are the factors that affect the elasticity of demand?

Factors that Affect the Elasticity of Demand. The three factors that influence the price elasticity of demand is: Substitutes – the more substitutes available for products will make the demand more elastic. Necessity – If the product is a basic need, people will be willing to pay a higher price for the product.

What are the factors that affect price elasticity?

The three factors that influence the price elasticity of demand is: 1 Substitutes – the more substitutes available for products will make the demand more elastic. 2 Necessity – If the product is a basic need, people will be willing to pay a higher price for the product. For example, gas, even if gas doubles, you will still have to fill up your tank to get to the office daily. 3 Time – If the price of cigarettes goes up with $1 per pack, and there isn’t a lot of substitutes, the smoker will keep buying his cigarettes, showing and inelastic demand. The price does not influence the quantity of demand. However, if the smoker cannot afford the $1 per pack more that he needs to pay and decides to stop smoking over time, then the price elasticity of cigarettes will become elastic over the long run.

Why is coffee elastic?

Coffee is an elastic product because a small increase in the price dropped the quantity demanded.

What are some examples of elastic products?

Examples of perfectly elastic products are luxury products such as jewels, gold, and high-end cars.

How much do apples cost per pound?

A company sells apples for $1.50 per pound. Due to cash flow problems, they decided to increase their price to $1.70 per pound. Is the demand perfectly elastic for apples?

What is price elasticity?

Price elasticity indicates how the changes in supply and demand influence the price. Products are usually inelastic or elastic: Inelastic – Inelastic products will have a small change in the price given the change to the supply or demand of the product.