If the price elasticity of demand is infinite, which type of demand is this?

If the price elasticity of demand is infinite, which type of demand is this?

• A. Perfectly Elastic Demand
• B. Perfectly Inelastic Demand
• C. Unit Elasticity of Demand
• D. Elastic Demand

Answer: (A)

When the price elasticity of demand is infinite, demand is perfectly elastic. Elasticity shows how much quantity demanded responds to a price change, and an infinite value means even a tiny price change leads to an enormous change in quantity demanded. The graph for this situation is a horizontal line, indicating that at the given price buyers will purchase any amount, but if the price rises even slightly, demand collapses to zero, while a fall in price would induce a huge increase in quantity demanded. This is different from perfectly inelastic demand (no response to price, vertical curve), unit elastic demand (quantity changes by the same percentage as price), and elastic demand (large but finite response).

When the price elasticity of demand is infinite, demand is perfectly elastic. Elasticity shows how much quantity demanded responds to a price change, and an infinite value means even a tiny price change leads to an enormous change in quantity demanded. The graph for this situation is a horizontal line, indicating that at the given price buyers will purchase any amount, but if the price rises even slightly, demand collapses to zero, while a fall in price would induce a huge increase in quantity demanded. This is different from perfectly inelastic demand (no response to price, vertical curve), unit elastic demand (quantity changes by the same percentage as price), and elastic demand (large but finite response).