Question

What is the price elasticity of demand on the following demand curve?

Straight line parallel to X-axis.

Answer 1

In this instance, a very slight decrease in a commodity's price results in an infinite (∞) increase in demand. Perfectly or totally elastic demand curves are demand curves with infinite elasticity. Demand is perfectly elastic in this situation. Perfectly elastic demand is shown by the horizontal straight line demand curve D₂ in Fig., which runs parallel to the X-axis. Nothing is demanded at price OP₁, but an endlessly enormous quantity is demanded at a slightly lower price OP. This represents price elasticity's upper limit or extreme. There are very few instances of demand that is perfectly elastic.