If demand is perfectly elastic, what is the absolute value of the price elasticity coefficient?
A)Infinity
B)Zero
C)More than one
D)Equal to the absolute value of the slope of the demand curve

Question

Quizplus · Accepted Answer

Perfectly elastic demand means that even a small change in price will result in an infinite change in quantity demanded, i.e., the demand curve is horizontal. The formula for price elasticity of demand is the percentage change in quantity demanded divided by the percentage change in price. If the demand is perfectly elastic, the percentage change in quantity demanded will be infinite while the percentage change in price will be small or zero, which gives an infinity value for the price elasticity coefficient.

If Demand Is Perfectly Elastic, What Is the Absolute Value