Suppose the demand for oranges sold from one roadside stand in South Australia is perfectly elastic. As a result, a 7 per cent increase in the price charged by the owner of this stand leads to
A) a virtually infinite increase in the quantity demanded at this stand.
B) no change in the quantity demanded at this stand.
C) zero peaches sold by this stand.
D) a 7 per cent decrease in the quantity demanded at this stand.
E) a 7 per cent decrease in demand at this stand.

Question

Quizplus · Accepted Answer

When demand is perfectly elastic, any increase in price results in the quantity demanded dropping to zero.

Suppose the Demand for Oranges Sold from One Roadside Stand