A perfectly elastic demand implies that any increase in price will cause quantity demanded dropping to zero.

A perfectly elastic demand implies that any increase in price will cause quantity demanded dropping to zero.

• A. True
• B. False
• C. It depends
• D. Not determinable

Answer: (A)

In perfectly elastic demand, the quantity demanded responds infinitely to price changes: the demand curve is horizontal at a specific price, meaning buyers are willing to buy any amount at that price. But at any price above that level, the quantity demanded drops to zero, since buyers will not purchase the good at the higher price. So the statement that any increase in price will cause quantity demanded to drop to zero aligns exactly with this concept.

In perfectly elastic demand, the quantity demanded responds infinitely to price changes: the demand curve is horizontal at a specific price, meaning buyers are willing to buy any amount at that price. But at any price above that level, the quantity demanded drops to zero, since buyers will not purchase the good at the higher price. So the statement that any increase in price will cause quantity demanded to drop to zero aligns exactly with this concept.